Under a Car Lease or ‘Asset Lease’ the financier is seen to purchase the vehicle on behalf of the customer, who then leases the vehicle back from the financier and pays the agreed monthly lease rental for the term of the lease.
At the end of the lease the customer can either pay a residual value, which is the final instalment on the lease and take ownership of the car, trade it in or re-finance the residual and continue the lease the vehicle.
Under a Car/Asset Lease the financier is the purchaser and owner of the asset and therefore is entitled to claim the Input tax Credit (ITC). This means that the amount financed on the contract will be the car price net of the maximum claimable ITC claimed by the financier.
GST is payable on each of the rental payments over the contract period (terms from 24 months to 60 months) as well as the residual amount paid at the end of the contract term. If the customer is an ABN holder they may be able to claim any GST as an Input Tax Credit (ITC) each month or quarter.
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If you have any questions or would like to get more information about a Car Lease or Asset Lease, email us and one of our experienced finance consultants will contact you shortly.