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Finance lease and Hire purchase

Discussion in 'Accounting, Tax & Legal' started by lawrence2, 17th Sep, 2010.

  1. lawrence2

    lawrence2 Member

    Joined:
    17th Jul, 2010
    Posts:
    8
    Location:
    Sydney
    Hey everyone,


    I've got two questions regarding the finance lease and hire purchase:

    1. From my understanding, for tax purpose, if it's a finance lease, you can deduct the repayment (rent) but you cannot claim the depreciation of a asset. However, you can deduct the interest included in the repayment and claim the depreciation if it's a hire purchase. Am I correct?

    2. For accounting purpose, can you recognise the asset in your balance sheet for both financial arrangements?


    Thanks for help.
     
  2. Rob G.

    Rob G. Well-Known Member

    Joined:
    6th Jun, 2007
    Posts:
    717
    Location:
    Melbourne, VIC
    Cheers,

    Rob
     
  3. lawrence2

    lawrence2 Member

    Joined:
    17th Jul, 2010
    Posts:
    8
    Location:
    Sydney
    Hey Rob, Thanks for your clarification!