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Rental / Hire


An operating lease provides the lease payments as a tax deduction. It
requires the user to bundle all components and does not maximise
tax deductions. An
operating lease provides an off balance sheet transaction for the
financing of a computer system. However, such a transaction can only
be for 75% of the estimated life of the equipment (approximately
3-4 years) and provides no guarantee regarding the ownership of the
equipment. (You maybe able to purchase the equipment at the end of the term at fair
market value – this figure however is not identified and could be 10%, 15% or 20% etc.)  A
rental is very similar to an operating lease. It overcomes many of the
restrictions of the operating lease, however, on or off balance sheet
issues should be confirmed with the client company’s accountants/Auditors.

(Conditional – ideal for high hardware-content transactions, terms for an operating
lease cannot be greater than 4 years on computer
equipment, useful for entities that do not have a capital approval
and are non-tax paying – rentals offer a greater range of terms for the same type of client)