What is a Rental Agreement?

A rental agreement may also be called an operating lease, where you can upgrade to new equipment during the term of the lease. The equipment is returned at the end of the term unless you upgrade. You may also opt to keep renting or make an offer to purchase the equipment.There is normally no residual, with the rental costs for the business usually treated as deductible expenses. Each installment includes GST and stamp duty.Rental equipment is not shown on your balance sheet, and neither are the rental payment liabilities, other than due or overdue payments.

Benefits of Renting

1. It conserves working capital
2. There is no need to budget for residual values and/or disposal costs
3. You can add-on & replace the equipment during the terms of the rental and;
4. Rental payments are full tax deductible