IN FOCUS
PRODUCTS
Commercial Hire Purchase (CHP)
As with Leasing, Commercial Hire Purchase is an effective way to conserve working capital. The customer obtains title to the equipment upon entering into the agreement.
The asset (goods) are included in the business’ balance sheet, as is the liability (loan).
The interest portion of payments is tax deductible and the goods can be depreciated as per the Australian Tax Office (ATO) guidelines.
By entering into this agreement you would effectively be purchasing the asset by making a series of stipulated payments over an agreed term. On making the final payment you would automatically gain ownership of the asset.
Operating Lease (Rental)
An operating Lease is more commonly known as a rental. Operating Leases are popular for equipment that has a high technological obsolescence rate such as IT equipment and telephone systems.
Payments are regarded as an operating expense by the tax office and are fully tax deductible. Terms are flexible, between 24months and 60 months. An operating lease conserves working capital and there are no Residual Value or Balloon payment to be made. Ownership does not pass to the lessee (you), but remains with the lessor (Iden).
Finance Lease
With an Iden Finance Lease, you have the use of property owned by someone else (in this case, Iden) for a stated period during which you make regular payments which are generally tax deductible. With a Finance Lease the risk associated with the residual value rests with the lessee (you) and not with the leasing company. The residual amount is the amount to be paid by the lessee at the end of the term, at which time ownership passes to the lessee.