Commercial Hire Purchase

With a Commercial Hire Purchase (CHP) car finance deal, the lender effectively purchases the vehicle on your behalf and then hires it back to you over a set period of time.

In reality, you possess the vehicle from the day you purchase and you repay the monthly fixed payments and pay the residual at the end of the payment period which is when you effectively have complete ownership.

This structure suits businesses that account for GST on either an accruals or cash basis and has in past times, often been utilised to finance vehicles for employees who received a car allowance from their employers.

In July 2012, changes in the laws on how GST is treated in regard to CHP were changed which made this a less attractive option to many purchasers.

The tax implications of CHP will be explained to you in greater detail by your Jade consultant in order for you to consider your options.