Purpose:
Available for companies, business, sole traders and professionals who use their motor vehicles for business purposes. Under this method, the GST component of the purchase price of the motor vehicle can be claimed back by the purchaser on the next Business Activity Statement rather than claiming the GST over the term of the contract.
How it Works:
The hire purchase agreement is a contract where the financier (the ‘owner’) gives the ‘hirer’ possession and use of the motor vehicle in return for regular payments. When the final payment is made, the hirer owns the motor vehicle.
Benefits:
Under this arrangement although you do not own the motor vehicle until all monies owed under the arrangement are paid in full, you can still claim a tax deduction for the depreciation of the motor vehicle as well as the interest component of the loan repayments where the vehicle is used for business related purposes.
Other benefits include fixed repayments over the life of the loan, loan terms of 9 to 60 months as well as structuring repayments with or without a balloon payment at the end of the loan so that you can tailor repayments to suit your lifestyle and cash flow.