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A lease is nothing but an arrangement between the financial institution and the customer in a legal way. The concerned finance institution will rightly purchase the asset on the customer’s behalf and then eventually lease it back to the customer over a considerable mutually agreed pre-determined period generally between 2 and 7 years. As the concerned finance institution is the purchaser of the particular asset, the particular finance institution claims back the GST component by leaving the customer to only effectively borrow for the price of the vehicle minus the GST. This particular set up obviously saves the customer interest over the due course of the loan as opposed to the financing of the full amount.

Characteristics of a lease

A lease must also very well consist of a residual which must be literally paid back to the financial institution upon the completion of the said finance term. This can be well paid out by a total payout in the full, a refinance or the overall funds that can be raised by selling the particular asset. Car lease payments do incur the GST however can be particularly claimed back by the company leasing the particular asset. The Car Lease payments can also be a major tax deductible expense for any company. When taking these two particular benefits into the consideration, you can see that these particular options do rightly provide great financial benefits to the leaser.

Car leasing is very suitable for the various companies, partnerships, the sole traders and also some individuals where the leased vehicle is mainly used for the income producing purposes.

Advantages and disadvantages of car lease

Advantages: The particular company’s entire car lease payments can be very ideally tax deductible saving the particular company‘s lots of money The finance company rightly claims back the upfront GST portion meaning the various customers only needs to borrow the purchase price minus the GST, which will considerably save a lot of the interest for the company in the long run. GST component of the repayments may also be well claimed back by the company A car lease does not show up as a debt on a company’s balance sheet as it is a necessary payment which is absolutely more beneficial to a certain company.

Disadvantages: You absolutely cannot lay down a particular deposit when in the process of setting up a lease however you can also provide a large first down- payment. A trade in is not permitted when the particular vehicle is on a lease.

Car lease taxation implications: If the particular amount to be financed is below the ATO depreciation limit of, 57,009 (solely for the motor vehicles), the full lease rental may be rightly claimed as a tax deduction as a part of the regulation. Above the depreciation limit, the overall interest and depreciation up to the motor vehicles value can be rightly claimed.

As you can see a car leases the right benefits far outweighs the various disadvantages it has. If a particular company is looking at the saving of the money wherever it can on its company’s fleet of the vehicles then taking the advantage of what a car lease can offer is a must.

Published at: Recent Health Articleshttp://recenthealtharticles.org

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