FINANCE PRODUCTS
Standard Operating Lease

What is it?

Under an operating lease/rental agreement the lessor retains substantially all the risks and benefits incidental to ownership of the leased equipment. Generally the term of the lease is for a period less than the effective life of the equipment, typically, these types of finance do not incorporate a residual value liability for the lessee (customer or borrower). Rather, the lessor (Financier/Funder)makes its own evaluation of the likely market value of the property at the end of the contract term and operating rentals are set accordingly.

Equipment commonly leased with Standard Operating Lease


Pros

Highly flexible
Easy upgrades & add-ons
Simple contract variation
Often able to upgrade & vary contract without a change to installment amounts
No residual risk
No balance sheet liability
Instalments 100% tax deductible

Cons

Ownership remains with the lessor

What type of business uses Standard Operating Lease?

Small & medium enterprises across all industry sectors, Government, Partnerships, Sole Traders, Clubs, Charities & other non-incorporated institutions

Tax and accounting treatment for Standard Operating Lease

• Instalments are an operating expense
• No balance sheet liability
• Instalments 100% tax deductable

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