Equipment Finance in the Tasmania Area
SMA has over 150 years combined experience in the Equipment Finance area.
Financing - Cars, Light commercial - 4WD's, Trucks, Trailers, Prime Movers & Buses, Earth Moving Machinery, Computers, IT Equipment, Printing Presses, Fork Lift Trucks, Boat Finance, Marine craft.
Equipment finance basically covers the financing of any item of equipment that can be utilised by an individual, partnership or company to assist the business in the generation of income. As long as the repayment on an item can be claimed as a business expense then the item can be financed.
What type of agreement is used usually depends on what method of accounting you use (i.e. cash or accrual), type and use of equipment or what preference you or your accountant may have.
It is recommended that you should seek specific taxation advice prior to entering an equipment finance agreement.
Amounts financed usually start from a minimum of $10,000 with no maximum limit. Terms range from 12 months to 84 months and payments can be structured to suit your business's cash flow i.e. monthly, quarterly or yearly.
Depending on the type and use of equipment you can also have a residual/balloon payment at the end of the contract term. Payments can commence in advance in arrears.
Our experience plus our accreditation with all the major financiers, enables us to ensure our clients get not only the right advice and the right deal for their business, but also at the best price.
| Commercial Loans
(also known as Asset Purchase or Chattel Mortgage)
With a Commercial Loan the client takes ownership of the goods upon delivery and the financier is able to secure the loan by registering as charge over the goods.
- You hold title to the goods.
- 100% finance can be provided.
- Repayment schedules are flexible and can be structured to suit client's cash flow.
- Balloon payments at the end of the term, similar to a lease residual value, can be arranged but are not mandatory as with lease.
- May provide tax benefits if the financed goods are used to produce assessable income - usually the full interest component of the repayment can be claimed. As you own the equipment, depreciation can also usually be claimed as a legitimate business expense.
- Term of the loan may be between 12 months and 84 months.
- You own the goods from the beginning of the contract.
- You can obtain the goods for a minimal capital outlay.
- You can match repayments to seasonal cash flow.
- You can pay lower installments during the term of the contract by having a balloon payment at the end of the term.
- You may be able to make use of taxation benefits if the goods financed are used to generate taxable income.
- Interest rate is fixed throughout the term of the loan.
- No GST charged on the repayments.
| Commercial Hire Purchase
The Hire Purchase agreement is simply a contract where the financier allows you (the 'hirer') the right to possess and use an item of equipment for regular payments. When the final payment is made, the title to the equipment is transferred to you.
- Repayments schedules are flexible and tailored to suit your cash flow.
- Can be arranged with no deposit or a deposit of your choice.
- Balloon payments at the end of the term can be arranged.
- Financier owns the goods until the final payment is made, at which time you will gain automatic ownership.
- The interest component of the rental and depreciation on the equipment can be tax deductible, provided it is used to produce assessable income and the expense is necessarily incurred in carrying on the business.
- You can repay the contract before the term ends.
- In Tasmania no stamp duty is charged on the rental.
- No GST is charged on the repayments.
- You can obtain the use of the goods for minimal cash outlay, so you working capital is not significantly affected.
- Flexible repayments allow for accurate capital budgeting.
| Finance Lease
The financier (the lessor) purchases the equipment required by you (the lessee) and is therefore the owner of the equipment. The financier then leases the equipment under a Lease Agreement to you, which sets out the residual value of the equipment, term of the lease in months, the monthly rental and the depreciation rate.
- Can obtain equipment without capital outlay.
- Payments can be made on a monthly, quarterly, half yearly or yearly basis.
- The residual value of the leased goods is established in accordance with Depreciation Schedules issued by the Commissioner of Taxation.
- The entire lease rental is usually tax-deductible, if the lease goods are used to produce assessable income.
- When the lease expires you have the following options:
- Return the equipment to the financier who can sell it but if the sale price were less than the residual value you would have to meet the shortfall.
- Refinance the residual value.
- Payout the contract.
- Make an offer to purchase the equipment, which may be accepted by the financier.
- With no initial outlay required, you can use your working capital for other purposes.
- You have the option to select the length of the lease term and repayments to suit you cash flow.
- You can negotiate rentals and residual values within an appropriate range allowing more flexibility in budgeting.
- You may be able to make use of taxation benefits.
- In Tasmania no stamp duty is charged on the rental.
| Novated Lease
As an employee of a company, you lease a car from a financier using a Finance Lease. You then sub-lease the car to your employer via an operating lease. Your employer enters an arrangement, which makes it responsible for meeting the payment. This is an ideal arrangement for those who have the option of receiving a car as part of their salary package.
- The lease is taken out in your name, your employer signs a novated lease agreement taking on the repayment responsibilities.
- The vehicle can be purchased without capital outlay.
- Your employer pays the lease rentals directly to the financier.
- The employer can provide the employee with a car without having it on its balance sheet.
- You have complete choice what you buy and here from.
- You have the use of the vehicle without having to budget for repayments.
- You can purchase the vehicle without deposit or the hassle of being reimbursed from you employer.
- If you leave your current company, the company is not left with an unwanted car and your not left without a wanted car.
- There are numerous tax benefits to the employer and employee.
- You have control over what you purchase including accessories.
We are second to none when it comes to equipment finance in Tasmania.!!
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