Comparing Leasing and CHP
Business enterprises ranging from one-man sole traders right through to large international corporations may seek funding facilities that will enable them to save money on the capital outlay necessary to purchase an asset while enjoying the income produced by it, or simply just being able to use it. This can be achieved through using either leasing or CHP.
Business enterprises will more than likely consider using both types. The choice between the two will depend on which option gives them the most convenience and flexibility as well as the opportunity to maximise their tax deductions.
Both leasing and CHP can be structured to meet your business’s special needs. To decide which is the best option, you must first understand those needs and determine the following:
- How does the equipment make the business more competitive?
- What is the most efficient use of the business’s cash flow to pay for this equipment?
- How long will the business use it?
- What will the business’s equipment needs be in the future
The choice of either leasing or CHP may simply boil down to the tax treatment of the asset, including GST, and whether the business wishes to bring it onto its balance sheet.