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Set up a hire purchase arrangement

Hire purchase arrangements are a common feature of small business operations. You'd use them in situations like this:

Example

You purchase a conveyor belt on a hire purchase basis over a period of 3 years (36 months). The price of the conveyor belt is $11,000 ($10,000 plus $1,000 GST) and the term charges are $3,600, so the total loan from the finance company is $14,600.

Note that the tax rates used in this topic are examples only. Ask your accounting advisor about the tax rates that apply to your circumstances.

This example is based on a GST accrual basis.

Here's what you need to do to set up a hire purchase arrangement for the example described above. For help with your hire purchase setup, ask the experts on the community forum.