In today’s competitive business environment, finding the right finance can make all the difference to your business goals.
Funding is available for new and used vehicles, coaches, light & heavy commercial vehicles, plant, machinery, office equipment and shop fit outs.
When looking for vehicle and equipment for your business, there are a range of different finance options including Chattel Mortgage, Commercial Hire Purchase, Finance Lease and Novated Lease. Each finance option has varying GST, tax and FBT implications. The choice may also impact on your cashflow and profitability.
In the course of our business we have gained considerable experience in many different industry segments such as: Construction, Engineering, Manufacturing, Plant Hire, Printing, Bus and Coach, Road Freight Transport, Business Services and Professional Practices.
We also provide car leasing and equipment leasing for non business purposes.
A Novated lease is the only equipment finance product where the asset does not need to be used for at least 51% business use.
A Novated Lease agreement is where an employee leases a car and then sub-leases (novates) it to their employer who pays the lease rentals. The employer agrees to have the lease novated to them while the employee remains in their employment. The employee remains fully liable for the debt and failure of the employer to pay the rentals constitutes default.
The employer is able to treat the lease rentals as a business expense despite the fact that the rentals made on behalf of the employee are not necessarily incurred in carrying on the business. The lease is a liability for the employee and does not affect the employer’s balance sheets and borrowing capacity.
Applications are processed the same way as a finance lease but an additional ‘Novation’ document is signed. The financier provides this document.
Contact us today to discuss your leasing and finance requirements.
An Operating Lease is a pure rental agreement, with no documented residual (however, the financier may in fact take the risk of covering the residual). The goods can be returned to the financier when the agreement expires.
As Operating Leases are usually written for terms significantly less than the useful life of the equipment, the financier should be in a position to sell at a profit or extend the lease at the same monthly repayment. The outstanding debt to the financier is reduced so the effective interest rate for the extended period is far higher than the original term. These extended lease rentals are referred to as “Inertia Rentals”.
Operating Lease commitments need only be disclosed by way of a footnote to the published accounts.
Under an Operating Lease agreement, should the asset be sold for less than the residual value, the user cannot be held liable. Therefore, the financier must have a high degree of confidence in the predicted resale value so no loss is experienced. If an Operating Lease portfolio is well managed profits will from the sale of Inertia Rentals assets.
Operating Leases are usually limited to motor vehicles, computers and multi purpose industrial equipment such as forklifts, as these have a sufficiently sizeable second hand market. A reasonable estimate of future value can be made.
Macquarie equipment rental finance is available in all states. Esanda provides vehicle operating leases.
Under an Asset Purchase agreement assets are technically hired until the last payment of the agreement is made, at which point the user receives full title and becomes the outright owner.
Depending on business usage, the interest portion of the regular repayments and depreciation can be claimed as tax deductions.
Flexibility of the structure of Commercial Hire Purchase agreements is an attractive feature. An unlimited amount of deposit can be made by way of cash or trade-in and a choice of either full repayment over the term or a lump sum (balloon) payment at the end of the agreement can reduce the monthly commitment and assist cash flow.
While there is no minimum lump sum payment (balloon) at the end of an Asset Purchase agreement, the maximums are as per those for lease residuals. This is to ensure that the lender always has sufficient security to cover the debt.
Chattel Mortgages are designed to allow clients using cash based accounting to claim back the full GST payment in their next BAS return.
Please note that as the financiers have to register a charge on the asset, the turnaround times for chattel mortgages are greater than lease/asset purchase. The financiers must receive original paperwork before settlement. Macquarie is the only financier that will settle chattel mortgages by fax.
Our team maintains relationships with several leading finance providers throughout Australia. Whether you need to refinance a loan or purchase new assets for your business, our team can put you in touch with the right people to help you achieve your business or personal goals.
Callaghans Financial Services and its advisers are Authorised Representatives of Fortnum Private Wealth Ltd ABN 54 139 889 535 AFSL 357306