Under a non-maintained operating lease the lessee is responsible for all maintenance and other running costs of the motor vehicle.
The Key Features and benefits of a Non Maintained Operating Lease are:
- The rental payments are fixed over the term of the lease.
- The financier assumes the residual value risk on the vehicle.
- The motor vehicle does not appear on the balance sheet.
- Operating costs can be included in a single payment.
Ownership under an Operating Lease and Rental
Operating Leases and Rental is where ownership of the goods is not the motivation but where upgrading to new equipment during the term is easy. The goods might be needed for a specific job or a specific term. If you don’t upgrade at the end of the term, equipment is returned at the end of the term. Alternatively you can make an offer to purchase the equipment.
Rental repayments on Operating Leases
Normally the residual in a rental agreement it is undisclosed.
Accounting under Operating Lease and Rental
Rental costs are written off in the month they are incurred. Rental costs are normally treated as deductible expenses for businesses.* GST is paid with each instalment.
*Please refer to your Accountant or Advisor for Tax Advice.
Rental equipment and operating leases are not shown on the Balance Sheet and neither are the rental payment liabilities, other than due or overdue payments.
Upgrades and Add Ons
One of the advantages of a rental and operating lease is easy upgrades and add ons.
Benefits of operating leases and rentals
- Upgrade, add and replace – make changes to your equipment throughout the contract
- You keep your capital – no deposit required and we pay 100% of the equipment so you don’t need to tie up your funds
- Short and long term contracts depending on the use for the equipment
- Easy budgeting – fixed rental and interest so you always know what you’re up for
- Off balance sheet liabilities and assets
- Tax advantages – 100% tax deductable when used solely for business