| 1 | What is the cost of goods financed | Excludes GST (100K) | Excludes GST (100K) | Includes GST (110K) |
| 2 | Who claims GST on cost of goods | Paid and claimed by Global Rental and Leasing | Paid and claimed by Global Rental and Leasing | Paid & claimed by Funder; On-charged to client who can claim (under CHP or CM) at the beginning of contract if on “accruals basis. If Cash Basis- then can claim upfront if CM. |
| 3 | Do repayments include GST | Yes, but payment is lower as based on $100k not $110k | Yes, but payment is lower as based on $100k not $110k | No but payment is higher as based on $110k, not $100k |
| 4 | Is there a residual value payable at the end of the contract | No | Yes | Usually Nil but can have a balloon value. |
| 5 | Who retains the risks of asset ownership | Global Rental and Leasing, as it has legal title | Risks and benefits passed to the client but legal ownership may or may not eventually be transferred | Risks & benefits passed to client and legal ownership is transferred at end of contract |
| 6 | Who can claim depreciation | Global Rental and Leasing | Global, but client amortises lease (see 11) | Client |
| 7 | How do repayments compare | Can be lower as Global invests in assets ie it takes a “residual risk” | Represents the entire cost of the leased asset plus interest | Represents the entire cost of the hired asset plus interest |
| 8 | Composition of repayments | Rental | Principal & interest | Principal & interest |
| 9 | What happens to the goods at the end of the contract | Client must return goods but can negotiate to continue renting | Client can pay the residual and retain the asset | Client retains the asset |
| 10 | Term of lease | As requested | Dependant on useful life | Dependant on useful life |
| 11 | Balance sheet implications | May not be on balance sheet, but total rental expense & commitments to be disclosed in notes to the accounts | Present value of minimum lease payments shown as asset & liability. Asset is amortised & liability is reduced by principal component of repayments. Commitments disclosed by note. | Full asset value accounted for on balance sheet and loan liability |
| 12 | Profit & loss implications | Entire rental (ex-GST) expensed in the P&L | Interest expense portion of repayments & amortisation of lease asset in the P&L | Interest expense portion of repayments & depreciation of assets in the P&L |
| 13 | Taxation implications | Rental (ex-GST) treated as business exp & eligible for a deduction, GST refundable by ATO | Interest expense & amortisation of lease asset claimable, GST refundable by ATO | Interest expense & depreciation of assets claimable, no GST |
| 14 | Is the contract cancellable | Yes, as long as terms & charges are met | Yes, as long as terms & charges are met | Yes- but penalties apply |
| 15 | Any penalties on cancellation | No, as long as terms & charges are met | Yes | Yes |
| 16 | Can client upgrade during the term | Yes | No | No |
