6th June 2012
Free up your cash flow and maximise your tax benefits
If you’re thinking about buying new vehicles or equipment for your business, consider using asset finance to purchase them. Not only will this free up your cash flow but it can also offer some attractive tax benefits as Mark Couter explains.
Grow your business without losing your cash flow
The cost of new equipment can eat into your valuable business capital. This doesn’t have to be the case with Asset Finance.
You can tailor your repayments to match your needs, cash flow and the seasonal flows of your business. Deposits are optional and usually unnecessary. And generally, the only security you need to provide is the asset itself.
When you’re looking at asset finance you should consider the interest rate, but also the repayment amounts and any other costs associated with the finance. This will help you determine the total amount you’ll pay.
Maximise the tax benefits on your assets
Using asset finance to buy equipment for business purposes can offer several tax advantages.
Depending on the type of finance you get, you may be able to claim your interest or rental payments, or depreciation on the asset— these business expenses can be brought forward so they can be deducted from this year’s taxable income.
Asset finance can also help you reap short-term tax benefits, by bringing your planned purchases forward into the current financial year — so you can start claiming deductions straight away.
If you already have asset finance in place, talk to your accountant to make sure you’re claiming all the deductions you’re entitled to.
If you’re thinking about buying new equipment in the near future, you should consider putting a pre-approved limit in place. That way if you need to move quickly, you’ll already have the funds available to act.
Talk to an expert
There are a number of asset finance solutions on the market, so before making any decisions, speak to your adviser and an Asset Finance specialist to help make sure you choose the right one for you.
The end of financial year can also get you more for your money, with many equipment suppliers offering significant discounts and value added incentives like extended warranties and free options to help finalise the deal.
Traditionally, June is the busiest month of the year for equipment financiers as well as equipment suppliers due to demand. The earlier you get organised the more chance you have to get everything finalised before 30 June.
4 business finance solutions that can save you money at tax time
- Commercial hire purchase. Your bank buys the equipment or vehicle then transfers the ownership to you once you have paid it off. You may be able to claim the payment interest and the depreciation of the asset.
- Finance lease. You lease the vehicle or equipment from your bank for a fixed term — and your lease payments are potentially tax-deductible.
- Operating lease. A fixed-term rental agreement where your bank leases the equipment to you, giving you the choice of returning the equipment or vehicle or upgrading it, or extending the agreement at the end of the term. Your rental payments may be tax-deductible.
- Chattel mortgage. A fixed-term loan where the bank holds a mortgage over the financed equipment as security until you pay off the loan. Depreciation of the asset, interest charges and transaction fees may all be tax-deductible.
Find out more about Asset Finance or call 1800 ASSETS (277 387) to speak to an Asset Finance Specialist.
Important information: This general information has been prepared without considering your individual circumstances. The information on taxation is of a general nature only. You should seek assistance from your taxation adviser.