Tax Benefits of Hiring Food Processing & Packaging Equipment
If you are growing or expanding your business operations, this can represent a significant outlay, further delaying your business growth. Hire can alleviate this unnecessary delay, with some associated immediate tax benefits for your business.
Cash Flow
The biggest hurdle to any business expansion is finances, as with growing your business, an expansion in workflow and processing requires a significant capital outlay.
New equipment and even secondhand equipment represents capital commitments that not many businesses can do annually.
Hiring food processing and packaging equipment involves scheduled rental payments, instead of this significant capital outlay.
Allowing you to protect your cash flow with rental repayments spread over a specified term.
Tax Write Offs
Operating in Australia, the treatment of tax in a hired and purchased scenario are treated differently when on the basis that equipment is 100% for business use.
When Hired
The entire rental payment is typically deductible as an expense with an immediate tax benefit.
When Purchased Outright
The business is required to capitalise the the cost and then depreciate it over the asset’s useful life. This is spread over the lifetime of the asset’s life, and can often be several years.
In summary, for the immediate tax write off, hire works well. Conversely if that is not a priority for your business, the outright purchase tax write off incentive is spread over time.
No Depreciation Costs
All equipment loses its value over time, with the introduction of newer models and heavy use contributing to this. By hiring long-term, you are not tied to the equipment and its declining value, this is absorbed by Viking.
Fixed Rental Rates
The rental rates are fixed for the specified term, providing ease of budgeting and improved cash flow management.
This is extremely beneficial in the current climate of rising interest rates, being able to appropriately fix these repayments serves a significant advantage.
Other advantages to hiring equipment
Access to New Equipment
There are clear benefits when incorporating new equipment into workflows, the main being efficiencies. If you do not have the upfront capital for a new machine purchase, this may limit your growth and access to new equipment. By hiring, you can readily access equipment that is designed to make workflows much more efficient.
Access to Readily Upsizing Equipment
Don’t let the capacity of equipment be the reason you turn down contracts or opportunities for growth. By hiring equipment with Viking, you have the opportunity to upsize equipment during your hire term if the machine is in stock and ready to go.
Viking Hire is a simple and easy way to get equipment on-site in the most cost-effective manner, without the hassle of long credit checks or financial outlays weighing you down.
It is a no-brainer and allows you to try before you buy, giving you confidence in not only your supplier but equipment too.
Speak to our team about how Viking Hire can suit your business and how we can set you up for success.
Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own circumstances and seek professional advice.
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