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 do you use this in your decision?
Put your own quote, loan terms and lease terms into the sheet on the home page. It shows the three options in today dollars, the deduction timing year by year, the GST credit quarter and the machine's value at the end, then names the cheapest on your figures and by how much. Every rate, residual and effective life is labelled an assumption for your accountant.
Which rules sit behind the tax treatment?
The tax treatment of the decision is the work of a registered tax agent. See the rules that apply to you for the held obligations under the Tax Agent Services Act 2009 (Cth), cited to their clauses.
Frequently asked questions
Why not just compare the monthly payments?
Because a smaller payment can cost more. A lease payment is smaller than a loan repayment, but the lease ends with a residual to pay or a machine to hand back, and the buy ends with a machine you still own. The sheet discounts both sides to today dollars so the timing and the end value land in the same figure.
Is this financial or tax advice?
No. Lease Buy Comparator is a decision aid that does arithmetic on your own figures under the assumptions you state. Your accountant confirms the tax treatment and your lender decides the finance.
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