Tax Deductions

Tax-deductible expenses differ between leasing and hire purchase

Ownership of Equipment

Equipment is not owned by the business

This is a type of rental contract; thus, the equipment is not deemed an asset of the business

Equipment is considered as an asset of the business from the beginning of the contract

Although the business does not own the equipment yet, it is deemed an asset of the business as of contract signing.

Expense Booking

Rent is booked as expenses

Since leasing is a rental contract, the monthly rental payments can be booked as expenses.

Depreciation is booked as expenses

In hire purchase agreements, wherein the equipment is deemed an asset of the business, annual depreciation, plus interest, is booked as expenses.

Tax Deductions

Larger tax deductions

The monthly rental payments are 100% tax-deductible expenses.

Lesser tax deductions

Annual depreciation, plus interest, must not exceed the installment payments of the same accounting period, therefore hire purchase allows somewhat smaller tax deductions.

Suitable Businesses

Highly Profitable Businesses

Seeking to reduce profits for lower tax liabilities.


For those having smaller liabilities and tax burdens.