The machinery finance questions, answered plainly.

Short, direct answers to the questions a grain or broadacre farmer asks when a six-figure machine is on the table: how a present value comparison works, how the GST credit times on a chattel mortgage, whether the tractor is pooled, what a lease residual is, and which of leasing or buying is cheaper in today dollars.

What is a lease-versus-buy present value comparison?

A present value comparison turns each option's future payments, tax deductions and end value into one figure in today's dollars, at a discount rate you choose. Comparing the lease, the buy and a used buy in today dollars shows which costs least once timing is counted, not just which payment is smallest.

How does a chattel mortgage change the GST timing on a tractor?

On a chattel mortgage you claim the GST credit on the machine in the BAS period covering the tax invoice, so a quarterly lodger sees the cash in the following quarter, not on settlement day. On a finance lease you claim the GST as each payment is made.

Does my tractor go to the small business pool or the instant asset write-off?

The instant asset write-off applies below a cost threshold set by the tax office, read at build time and dated because it moves. A six-figure tractor is at or above the limit, so it goes to the small business pool instead: a first-year rate on the cost, then a diminishing rate.

What is the residual on a farm machinery lease, and who pays it?

The residual is the balloon payable at the end of a finance lease to keep the machine, often a set percentage of the cash price. It is a real future cost, so its present value belongs in the lease. Where the residual is guaranteed and the machine is worth less, you pay the difference.

Is leasing or buying a tractor cheaper in today dollars?

It depends on five things: the lease payment against the loan repayment, the residual against the machine's value at the end, the GST credit timing, the deduction timing under your effective life, and your private use. Buying ends with an asset, leasing with a residual, so both belong in the comparison.