1. Lease Market
in Australia
- Akarshi Jain,
- Roll no. – 858
- B.B.A, LL.B.(Hons.)

2. Origins of Lease Market in
Australia
 Presently equipment financing consists of:
i. Leasing
ii. Hire Purchase
iii. Chattel Mortgage
 Lease – A late 1950’s phenomenon.
 Predominant equipment financer groups
 Domestic & International Banks
 Captive Financiers

3.  Finance Companies
 Fleet leasing companies
 Rental companies
 In early years, lease financing mostly motor-vehicle
related.
 More recently, office equipment have grown
strongly.

4. Leasing as a financial tool
 For Income Tax purposes, no option can
be there for the lessee to purchase the
leased goods at the end of the term.
 However, the lessor may re-lease or make
an offer for the goods.
 Financial lease provides for the lessee to
indemnify the lessee in case of any loss on
sale for less than the residual value.

5.  Lessee can claim the full amount of lease rentals as
a tax deduction.
 The lessor, being the owner, claims the depreciation
and any investment incentives

6. Government Policies
 Currently, it is necessary for the lessor to be
confident that the value of the equipment
when returned by the lessee will achieve a
resale price which is predictable.
 GST introduced on 1 July, 2000 which focuses
on flexibility.
 Taxation of Financial Arrangements (TOFA)
 Personal Property Securities (PPS)

7. Proposals Pending
 IASB and FASB issued ED 2013/6 Leases. It seeks to:
i. Amend the definition of lease.
ii. A new classification system for leases.
iii. So that lease is recognized as assets or liabilities on
the balance sheets.

8. iv. “Right to Use” approach – to recognize payments
under the lease contract as a liability and
recognize the right to use the underlying asset as
an asset in its statement of financial operation.
v. Lessors have new requirements about whether
they have retained the risks and benefits inherent
in the asset.

9. General Equipment Finance,
2012

10. General Equipment Finance,
2012
For new businesses in 2012 within the general
equipment financing,
 Leasing accounted for 19% of the total
portfolio, hire-purchase being 19% and
chattel mortgage was 62%.
 A little over a third of leasing is operating
leases, with finance leases being the
remainder.

11. Total Equipment Finance, 2012

12. Product Type
General Equipment Finance
By Equipment Type, 2012, $84.5 bn
(Excluding Fleet Leasing)

13. Recent Trends in Equipment
Financing

14. Trends in Equipment Financing
 Although the Investment Allowance was phased out
in December 2009, new business levels did not
subsequently slump.
 Volume in the June quarter 2010 was down only 5%
on the December 2009 quarter.
 In 2011/12 each quarter showing an increase on the
corresponding period in 2012.
 The total equipment finance volume in 2012 of $43.7
billion increased by 6% as compared to $41.3 billion
in 2011.

15. Thank You!
Any Questions?