a.) Chattel Mortgage: This equipment finance option is nearest to a standard property mortgage because of its structure. The equipment will be owned by the business but will be used as the primary security against the loan. After the lender makes the payment to the supplier, you may be able to claim the GST component of the purchase price of the equipment in your next BAS statements. Also, the interest and depreciation are usually tax deductible if the equipment is used to create assessable income.
b.) Finance Lease: You can arrange a commercial purchase price of the equipment with a lender. The lender purchases the equipment and leases it to you for an agreed term. Lease rentals are tax deductible as long as the equipment is used to generate assessable income. You can also claim the GST component of the rental in your Business Activity Statements (BAS).
c.) Purchase: You can purchase the equipment using your own money. This allows you to claim depreciation as long as the equipment is used to produce assessable income. However, you won’t be able to capitalize on any tax benefits that may be available if you were to finance it. Note that this can possibly put undue weight on your cash flow.
d.) Novated Lease: If you need finance for a vehicle, you can get a novated lease. This permits your employees a choice to lease a vehicle of their choice and retain ultimate responsibility for it. You can then make lease payments on behalf of the employee by making deductions on their pre-tax income.
e.) Commercial Hire Purchase: This is also called asset purchase and is similar to finance lease. However, your business immediately owns the equipment once the final payment is made.