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Ideal for operators
whose aim is eventual ownership, Graphics Finance Lease Purchase is
structured to preserve capital whilst buying plant and equipment from
generated income.
What
is it?
- The operator
hires the equipment for an agreed period and achieves ownership on
completion of the agreement.
- For tax and
accounting purposes, the operator is treated as the owner from day
one and claims depreciation and interest as their deductions.
- This is a form
of "on balance sheet" funding.
- Interest rates
are fixed for the term
- Repayment periods
usually range from 2 - 7 years.
- A deposit is
sometimes applied at the start of an agreement. This can either be
in the form of cash or trade-in proceeds on existing equipment.
- GST is charged
upfront on the hire purchase contract and may either be financed within
the contract or a deposit applied (subject to conditions). The borrower
claims the input credit upfront if eligible.
Benefits
- Spreads the cost
of buying as the equipments earnings pay for its acquisition.
- Plant is shown
as an asset on the balance sheet.
- Operator can
claim depreciation allowances and interest.
- Operator obtains
"equity" in the equipment with each payment.
- Guaranteed ownership
on completion of the finance term.
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