Does Leasing NDT Equipment Have Tax Advantages?
Considering how to maximise cash flow and company assets can be challenging. Leasing NDT equipment can, in many cases, be a strategic move that comes with various tax benefits.
However, it’s necessary to consider a wider variety of financial aspects to determine whether or not leasing is the best option.
The overarching tax benefit that leasing brings
In general, most companies can claim leasing costs as a tax deduction. This is with the proviso that the equipment is solely for business use. This removes any complex calculations that are needed when calculating various elements of owning equipment, such as depreciation or any interest that needs to be paid when making monthly purchase payments.
Considering other factors
While leasing NDT equipment can be the most tax-efficient option, if one or more of the following are relevant then this could reduce the advantage.
- Interest rate: When leasing equipment, the company you hire from will have factored depreciation and interest rates into the price. This might be higher than it would when purchasing and means that the eventual price paid is more than it would’ve been to buy outright
- GST: The company that leases the equipment will be able to claim the GST element. This removes the opportunity for the customer to create additional cash flow through funding the GST
- Further tax benefits: Depreciation is the big one – it’s something that can be claimed when purchasing equipment but not when leasing
While every company has unique circumstances, in the vast majority of cases there are positive tax advantages to leasing equipment. Other issues, such as cash flow, technology evolution, taking advantage of more efficient inspection methods and other residual value benefits will all have an impact on whether or not the tax advantages of leasing are best in the long run.
Taking expert advice is key – as is working with a progressive procurement provider that can provide the right solutions to serve business needs.
Nexxis provides the ultimate choice when it comes to funding NDT equipment. From long-term leasing to shorter term rentals or outright purchases.
Contact us to find out more, or request a quote online.
