14 September

Tax and Truck Loans

Tax. In one context that is tax payable, it can be an issue that we dread addressing. But in the context of your truck loan, addressing the tax implications of the range of loan products can be of significant benefit to your business. Jade Truck Loans offers the full portfolio of commercial finance facilities so our customers can select the loan type which will deliver the most attractive tax benefits to their operating structure.

We have extensive experience in handling truck loan transactions and recognize the diverse nature of business structures in the transport sector and throughout the truck purchasing landscape. This includes individual entrepreneurs, partnerships, family-owned enterprises, SMEs, and major corporations.

Business entities can take various forms, including those with an ABN, individual proprietors, and proprietary limited companies. Some might be registered for GST, while others aren't. Given the differences in their setups, these entities have unique needs concerning tax deductions and GST. They either adopt a cash-based accounting system or an accrual accounting approach. These distinctions play a pivotal role in determining the kind of truck loan a business opts for.

Truck Loan Types

Jade Truck Loans offers:-

These loan types have different treatments in regard to GST, tax deductions and depreciation.

But despite the differences, when arranged through Jade Truck Loans, these loans all have several similarities:-

  • Jade’s cheap interest rates. All our truck loans are based on our signature cheap interest rates, which our consultants negotiate individually with lenders on behalf of our customers.
  • Fixed interest rates. Once negotiated, that cheap interest rate will remain fixed for the full term of your Jade truck loan. With some truck loans extending over many years, a fixed interest rate provides some certainty for your business. A particularly welcome certainty in the current uncertain environment.
  • Fixed monthly repayments. Your Jade consultant will negotiate with the lender to achieve the best repayment level that meets both yours and the lender’s requirements. Having a fixed monthly outgoing allows businesses to plan cash flow.
  • Fixed loan term. Loan terms on all Jade truck loans are negotiated to best meet our customer’s requirements.
  • Balloon/residual/buyback option: This is optional for all loans and is determined at the time of establishing the loan.
  • Useage: The borrower has full use of the truck on finalisation of the loan and taking delivery of the vehicle.
  • Ongoing expenses: The borrower is responsible for the ongoing operating expenses of the truck including registration, insurance, maintenance and other costs.

Treatment of GST

Chattel Mortgage and Commercial Hire Purchase

With these loan types, the borrower is buying the truck and the lender using the truck as security or has a mortgage over the loan.

  • The borrower can claim the full GST on the purchase price on the BAS return which follows the purchase.
  • As all the GST has been claimed, no GST applies to the repayments.
  • The interest portion of the loan is not subject to GST.

Rent to Own and Leasing

These are off-balance sheet loans with the lender purchasing the truck and leasing/renting it back to the borrower.

  • Therefore, the lender claims the GST after purchase and then applies GST to the repayments.
  • The borrower pays GST on the monthly payments except for the interest portion of the repayment, and claims it on their BAS return.

Tax Deductions

Chattel Mortgage and Commercial Hire Purchase

  • The full amount of the monthly repayments and balloon is not fully tax deductible.
  • Only the interest portion of those payments is tax deductible.
  • Borrowers claim depreciation on the truck in line with ATO rulings.

Rent to Own and Leasing

  • Lease and rent payments are treated as an operating expense and are tax deductible.
  • These are off balance sheet loans so the truck is entered on the balance sheet of the lender not the borrower. As such, the lender accounts for depreciation, not the borrower.

Sourcing and Selecting Your Truck Loan

When it comes to selecting which truck loan type is most appropriate for your business, Jade Truck Loans refers you to your accountant or financial advisor. They have detailed knowledge of your business objectives and accounting system and should be well-informed to assist you make that decision. With the decision made, you simply advise your Jade Truck Loans consultant what loan product you would like us to source for you.

Your Jade Truck Loans consultant will source you a loan quote from our large lending panel to suit your business and the truck you are purchasing. Most banks and many of our non-bank lenders offer all these commercial finance facilities for the purpose of purchasing trucks and heavy vehicles.

With a highly competitive market, Jade Truck Loans has more choices to source you the cheapest quote for your truck loan. Your consultant will work with you to structure your individual loan to best meet your requirements and deliver you the best outcome for your business.

Taking the time to consider the tax implications of each loan type in relation to your individual business in consultation with your accountant can be highly beneficial to your business. So in the context of a truck loan, tax is an issue which you should be addressing in detail.

To source a cheap truck loan quote that suits your business set-up, contact Jade Truck Loans on 1300 000 003

DISCLAIMER: THE INFORMATION PROVIDED IN THIS ARTICLE IS FOR GENERAL INFORMATIVE PURPOSES AND NOT INTENDED AS FINANCE ADVICE. INDIVIDUALS SHOULD REFER TO THEIR FINANCIAL ADVISOR OR ACCOUNTANT FOR ADVICE IN REGARD TO THEIR INDIVIDUAL FINANCIAL DECISIONS AND SPECIFIC CIRCUMSTANCES. DETAILS IN REGARD TO GOODS, SERVICES AND GOVERNMENT OFFERS AND POLICIES HAS BEEN SOURCED FROM PUBLIC MANUFACTURER AND SUPPLIER WEBSITES AND GOVERNMENT RESOURCES. NO LIABILITY IS ACCEPTED FOR ANY ERRORS OR MISREPRESENTATION OF INFORMATION AND DATA OBTAINED FROM THESE SOURCES.

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