Goods & Service Tax Reference Guide

How does GST work?

Generally, each time a business supplies goods or services, a 10% GST will be charged. The business will receive a credit for any GST incurred in the production of those goods or services.

How does it apply to my transactions with Cat Financial?

The cash flow impact of the GST on your financing should be minimal, as you would receive a credit for the GST component paid on either a monthly or quarterly basis (depending on the size of your business).

Please note that in some states, taxes and duties are applicable on the GST inclusive amount.

Cat Financial provides four main types of financing - Hire Purchase, Finance Lease, Operating Lease and Chattel Mortgage.

Hire Purchase. GST will only apply to the principal portion (i.e. full purchase price of the equipment) when the interest charge has been separately disclosed. If the interest has not been separately disclosed, the GST will be charged on the principal and interest.

GST on the purchase price of the machine is due up front.

Finance and Operating Leases. GST is applicable on the rental payment for both of these types of equipment financing. GST will also apply to any residual payment.

Chattel Mortgage. GST is not charged on the repayment under this type of financing. However, GST on the purchase price of the machine would be due up front.

Cat Insurance. GST will be payable on the insurance premium (including Fire Service Levy) for all insurance policies.

An Example
Assume repayments under an operating lease were $2,000 per month prior to the GST being implemented. Repayments would rise to $2,200 per month to include GST.

Businesses incurring the $200 GST charge in the course of their normal business activity are able to claim a credit back from the Tax Office in their monthly or quarterly GST return.

(Note: This example does not include the impact on state duties and taxes).

Need more help?

Naturally there are many issues that must be considered when choosing your method of finance. For more information on your financing options please call your local Cat Financial representative.

Information sites about the GST

If you require further information in regards to the GST and its impact on your business, please contact your accountant or visit the Australian Taxation Office.

Disclaimer

The information on this site is provided for general guidance on matters of interest only. It should not be used as a substitute for consultation with professional advisors. Before making any decision or taking any action, you should consult with your regular professional advisor. No warranty is given to the correctness of the information contained on this site and no liability is accepted by the company for any statement or opinion, or for any error or omission.