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Our extensive industry experience enables us to take the stress out of financing the following Business Assets in an efficient and timely manner:
- Cars
- Vans
- Trucks
- Prime Movers
- Trailers
- Railway Rolling Stock
- Cranes & Mobile Cranes
- Construction Equipment
- Earthmovers & Excavators
- Dump Trucks
- Mining Equipment
- Tractors & Other Agri Equipment
- Manufacturing Equipment
- Cool Rooms
- Spray Booths
- Office Equipment
- Office Fit-Outs
- Computer Hardware
- Computer Software
- Medical Equipment
- Aviation Finance
- Marine Finance
- Insurance Premium Funding
- And much much more
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When you invest $20k or more in Plant & Equipment, Vehicles or even Racking, we recommend you look at Financing these items by taking out a Loan over 1-5 years. Occasionally businesses pay cash for purchases under $50k and then regret that decision at a later date, as they tie up their short term cash flow in a medium term asset purchase. The different Finance Options are briefly explained below (we recommend you discuss these options with your accountant).
Finance Options
- LOAN – Commercial Loan (Chattel Mortgage)
- HIRE PURCHASE – Commercial Hire Purchase
- LEASE – Finance Lease
- IMPORT DIRECT – Short Term Trade Finance facility then revert to traditional Loan or HP
- NOVATED LEASE – Salary Packaging LeaseRefer below for more details on these different finance options.
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Commercial Loan (Chattel Mortgage)
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What is it?
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You source and own the asset and the lender provides a loan secured by the asset.
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Who owns the asset?
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You do and the lender holds it as security.
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What is the potential tax benefit?
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The interest on the finance and depreciation of the asset are generally both tax deductible.
Commercial Hire Purchase
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What is it?
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The lender purchases the asset at your request and you buy it from the lender in installments.
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Who owns the asset?
The lender does until the agreement has been paid when ownership is transferred to you.
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What is the potential tax benefit?
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The interest on the finance and depreciation of the asset are generally both tax deductible.
1st July 2012 Federal Government Legislation Changes:
From the 1st July 2012, all Hire Purchase agreements were treated as fully taxable, which means the debit interest and financier fees were subject to GST either paid upfront or over the life of the loan.
As a result of these changes we have seen a reduction in Hire Purchase agreements as Commercial Loans (Chattel Mortgage agreements) are not impacted by this new legislation.Finance Lease
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What is it?
The lender purchases the asset at your request and then on-rents it to you for an agreed period.
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Who owns the asset?
The lender does and you rent it from the lender.
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What is the potential tax benefit?
The rental payments are generally tax deductible.
Import Direct
This facility is available to support businesses Importing P&E from an overseas supplier, with the end finance being provided through a traditional Equipment Finance facility.
Novated Lease
This facility is a type of motor vehicle lease that allows a business to lease a motor vehicle on behalf of an employee, with the responsibility for the lease lying with the employee and the lease payments being made from the employee’s pre-tax income. A Novated Lease is generally a three way agreement (“novation agreement”) between an employer, employee and lease company, under which the employee leases a vehicle from the lease company, and employer agrees to take on the employee’s obligations under the lease. Normally, the employer then makes the lease payments on behalf of the employee, and deducts them out of the employee’s pre-tax income (known as salary packaging a vehicle).
More information at: http://en.wikipedia.org/wiki/Novated_lease -
PPSA – Personal Property Securities Act 2009 and PPSR – Personal Property Securities Register
Under the PPS Act, retention of title (ROT) suppliers and lessors will become secured parties with a security interest in the collateral, and you will need to lodge a (PMSI) purchase money security interest. This is a certain type of security interest which elevates the interest of the secured party to a higher status relative to other interests.
One Example of note: A PMSI should be lodged in a PPS lease transaction. A PPS lease is defined in the Personal Property Securities Act 2009 (Cth) as a lease or bailment of for a term exceeding either three months in the case of motor vehicles, boats and aircraft, or one year for other types of personal property. Both financing leases and operational leases can fall within the definition of PPS lease.
WHEN A SECURITY INTEREST BEATS LEGAL TITLE – ONLY UNDER THE PPSA one shocking example which highlights the complexities around PPSA
http://www.corrs.com.au/thinking/insights/when-a-security-interest-beats-legal-title-only-under-the-ppsa/Useful links below:
http://www.ppsr.gov.au/AsktheRegistrar/InformationSheets/Pages/Purchase_money_security_interests.aspx
http://www.comlaw.gov.au/Details/C2013C00604
http://www.ppsr.gov.au/Pages/ppsr.aspxPlease note: We have provided general information about PPS reform and does not constitute legal advice. You should seek legal or other professional advice to consider the application of the PPS Act to your individual circumstances.
Disclaimer-
The taxation position described is a general statement and should only be used as a guide. It does not constitute tax advice and is based on current tax laws and their interpretation. We recommend you obtain your own independent tax advice in relation to your individual circumstances.
