Commercial Hire Purchase

Under a Hire Purchase agreement, the ownership of the goods is transferred to the hirer at the completion of the hire purchase contract. GST is not paid on the instalments, it can be claimed on the initial purchase. Residuals/Balloons on Hire Purchase Agreements

Hire Purchase agreements often contain options for residual or balloon payments at the end of the term which will reduce your monthly repayments during the contract term. At the end of the term when the residual or balloon is due there is an option to refinance it for a further term.

The purchase price under a hire purchase contract is treated as a capital purchase and depreciated over the life of the asset. The interest cost is also treated as an expense. GST is accounted for at the start. Under a hire purchase, contract depreciation and interest charges are normally treated as deductible expenses for businesses. GST is usually claimed in full up front, however conditions apply
* Please refer to your Accountant or Advisor for Tax advice.

Both the asset and liability are shown on the balance sheet including GST

Upgrades and add ons generally require another hire purchase agreement and/or payout of the old hire purchase agreement.