Who does a Finance Lease suit?
A Finance Lease is used by businesses or individuals for the purpose of purchasing a new or used vehicle that is used for business or investment purposes. Borrowers must be registered for GST purposes.
But just wait a minute, there are also tax implications for a Finance Lease. GST is charged on the monthly lease rental and on the residual value at the end of the lease. Where the customer is registered for GST, they can claim some or all of the GST contained in the lease rental and the residual value as an input credit on their next BAS. Where the amount financed is below the Depreciation Limit the customer can claim the lease rental as a tax deduction. Where the amount financed is above the Depreciation Limit, the customer can claim interest charges on the lease and depreciation up to the value of the Depreciation Limit.