| Lease Residuals ? Motor Vehicles |
| The change in effective lives of cars for tax depreciation purposes to 8 years (from 1st June 2002) has changed effective leasing arrangements. |
The Australian Taxation Office provides guidelines to financiers providing leasing finance on motor vehicles (ID 2002/1004).
A minimum residual value must be included in leasing documentation for the regular monthly payments to qualify as a tax deductible lease payment. If it fails the test, part will be regarded as interest and part will be principal ? as a hire purchase contract.
The minimum residuals as a percentage of the full cost of the vehicle are:-
| Term of Lease
|
| | One Year
| 65.63%
| Two Years
| 56.25%
| Three Years
| 46.88%
| Four Years
| 37.5%
| Five Years
| 28.13%
| | | | |
25th-April-2004 |
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