Asset Finance and Commercial Hire Purchase Melbourne

All Finance Asset Finance

At All Finance, we will carefully review your aims, objectives, corporate profile, operating structures and business environment to ensure that we establish the most beneficial asset financing arrangements for your circumstances.

Our extensive experience, combined with our ongoing review of new and emerging equipment finance products, enables us to match your requirements to the most suitable product available.

Whether it be a:

finance lease;
operating lease;
novated lease;
hire purchase; or
chattel mortgage

you need to ensure that your asset financing arrangements provide the optimum benefits in terms of:

equity;
cash flow; and
taxation

Asset Finance

The acquisition of assets - particularly expensive capital equipment - is a major commitment for many businesses. How that acquisition is funded requires careful planning.

Rather than pay for the asset outright using cash, it can often make sense for businesses to look for ways of spreading the cost of acquiring an asset, to coincide with the timing of the revenue generated by the business.

The most common sources of medium term finance for investment in capital assets are Hire Purchase, Chattel Mortgage and Leasing. All Finance has the experience to structure and the avenues to fund your acquisition be it a car, heavy vehicle, large piece of machinery or any other business asset for that matter.

It is vital that this finance be structured in such a way that it generates the full taxation benefits allowable during its term and that the asset be able to be updated at a later stage without loss on trade. To enable this requires an understanding of not only the finance but also the nature of the asset. All Finance has been arranging business finance for more than 8 years and with over 60 years of experience, there isn't a finance structure that hasn't been seen.

Commercial Hire Purchase

Purpose: A Commercial Hire Purchase arrangement is an agreement to purchase a vehicle or piece of equipment subject to payment terms to the finance company. You will automatically own the goods when you pay the final payment, different to a lease. Term: The term of finance agreement can be from 1 – 5 years and in some cases longer depending on the equipment.

Deposits: Deposits are not required. You might choose to trade in an existing vehicle in order to put in a deposit to reduce the amount to be financed.

Residual/Balloon: You can choose to have a balloon payment as the last payment of your finance agreement. This balloon payment is usually between 10% - 40% of the cost price, but may be as low as one dollar, dependent upon the equipment. This decision is usually influenced by the level of monthly payments you are comfortable with.

Owner of the goods: The financier retains legal title (ie: owns the goods) during the term of the agreement. You automatically secure ownership upon payment of the final instalment.

Accounting benefits for commercial hire purchase

For income tax and GST purposes, a hire purchase agreement is treated very differently to a finance or operating lease.

Under GST, a hire purchase agreement is treated as a "taxable supply" on the commencement of the arrangement between the hirer and the financier.

With a commercial hire purchase arrangement, there is deemed to be a sale of the equipment from the financier to the hirer, the GST liability arises at the commencement of the arrangement.

Even though the total amount payable under the agreement will be paid by periodic instalments and ownership of the equipment will not pass to the hirer until the final repayment.

The financier, being the supplier, is responsible for the payment of the GST liability. Therefore the amount financed is inclusive of GST, and your monthly repayments are not subject to GST unless you are on a cash basis for GST. (Seek advice from your accountant).

You can claim the interest component of all repayments. The depreciation of the goods is fully tax deductible providing goods are used 100% for business purposes. The goods you purchase become an asset that shows on the balance sheet of your business.

The goods will also be a contingent liability until the end of the finance agreement. You may be liable to pay fringe benefits tax and should refer to the ATO at: www.ato.gov.au/businesses for further information).

You should always seek advice from your accountant on the rules and how they apply to your particular business and equipment. For any quotes on Equipment or Vehicle Finance please contact All Finance Equipment Finance.

Benefits of Equipment Rentals

Many businesses are now financing their equipment via Rental Agreements. This is due to a number of reasons such as: Renting provides a cashflow-friendly way of obtaining the latest equipment without tying up capital.

Technology based equipment eventually becomes obsolete – all too soon it will no longer be efficient or compatible with new technologies.

When you own the equipment you have no choice but to take the risk yourself, with rental the risk can be transferred to the lender. At the end of the rental term you have three choices, continue to rent the equipment if it still suits the business needs, return the equipment to the lender or make an offer to purchase it.

The payments are usually tax deductible or can be capitalized. The real benefits of technology come from using it, not owning it- particularly when IT equipment can be expensive to purchase and quick to depreciate.

Fixed monthly or quarterly payments can help you budget more effectively and your rental payments are fixed for the term of the agreement.

You can usually finance 100% of your acquisition including hardware, selected software, installation, maintenance and services into one arrangement. Some of the types of equipment that can be purchased via a Rental Agreement include:

Desktops, Monitors, Laptops, Servers and Printers
Telephone Systems, Network and Communications
Photocopiers, Medical equipment, Dental equipment
Gaming equipment and Security equipment.