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Motor Vehicle Leasing

For Your on Road Needs

PFP will review the best options when purchasing motor vehicles. The most common motor vehicle leases are:

Leasing your motor vehicles doesn't tie up your valuable capital and repayments can be structured to your budget over a period of 1 – 5 years. Your taxation advisor should assist you with the details on planning an effective tax position.

Car Lease

A Car Lease or Finance Lease, enables the borrower to have the use and benefits of ownership while the lender retains ownership of the vehicle. At the end of the lease, the borrower can either pay a ‘residual’ value and take ownership of the vehicle, trade it in or re-finance the residual and continue the lease.

No deposit is required. Tax benefits give the borrower the full benefits of depreciation and interest. GST however is claimed by the lender, not the borrower. Therefore, amount financed is pre-GST thereby keeping monthly repayments lower. The borrower also has the ability to make advance lease payments for tax deduction purposes.
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Commercial Hire Purchase (CHP)

A Commercial Hire Purchase (CHP) is an arrangement where the lender agrees to purchase a vehicle on behalf of the borrower and then hires it back to the borrower over a set period of time. At the end of the contract term when the total price of the vehicle and interest charges have been paid for in full, the ownership transfers to the borrower.

Businesses registered for GST using Accrual accounting can claim the GST as a lump sum on their next Business Activity Statement (BAS). Businesses using Cash accounting can claim the GST in installments over the term of the contract.
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Novated Lease

A Novated Lease will suit any employee wanting to include a motor vehicle as part of their salary package, providing the employer offers salary packaging to their employees. In simple terms, this lets an employee pay the car loan with pre-taxable income (salary sacrafice), effectively reducing taxable income. A Novated Car Lease is a three-way agreement between the lender, the employer and employee. The contract for finance is between the employer and the lender.

At the end of the term of the Novated Lease, the employee has the option to purchase the car for a residual amount, or the motor vehicle can be traded in or sold.

Types of Novated Leases are a fully maintained car lease where all the operating costs of the vehicle area covered by the lender, or a Non Maintained Novated Car Lease where the employee is responsible for all operating expenses associated with the vehicle.

Novated Leases are also available for motorbikes, operating leases and fully maintained Novated Operating Leases.

GST is charged on the monthly lease rental and can be claimed as an Input Credit by the employer, provided they are registered for GST. GST is also charged on the residual value on the lease which becomes the responsibility of the employee when the Novation Lease reverts back to the employee at the end of the lease.

Fringe Benefits Tax (FBT) is payable on the vehicle and is generally passed onto the employee. The amount of FBT depends on the distance travelled each year. The higher the kilometres, the lower the FBT.
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Chattel Mortgage

Under a chattel mortgage the lender advances funds to the borrower to purchase a vehicle. The borrower takes ownership of the vehicle (chattel) at the time of purchase. The lender takes a takes a mortgage over the vehicle as security for the loan. At the end of the contract period, the mortgage is removed giving the borrower clear title to the vehicle.

The main benefit for businesses using Cash accounting is the ability to claim GST paid on the purchase price of the vehicle price as an input credit on their next Business Activity Statement (BAS).
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Operating Lease

We can assist you with assistance to make sure you choose the right type of finance and we look after all the paperwork, letting you get on with business! So call Bradley Field now on 0419 252 992
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