All maintenance / consumables are calculated at today’s Rand / Dollar exchange, therefore eliminating uncontrollable inflation.
Approvals of capital expenditure budgets are avoided and capital outlays as well as working capitals are reduced, as no deposit is required.
The upgrade option gives your company the ability to upgrade the equipment at any stage of the rental agreement, which will enable you to keep up-to-date with the latest technology and thus the changing needs and requirements of your organisation.
A rental is considered as an operation expense and therefore has the following advantages:
There is an income tax advantage in that all monthly payments are fully tax deductible.
The rental transaction is not reflected on the balance sheet as an asset or liability and as a result will not affect your organizations gearing and would be a positive on your financial ratios.
The recording procedures for accounting purposes are simplified as monthly rentals and reflected as a monthly expense on the income statement and no further entries are required.
Significant savings in VAT are achieved as VAT is paid monthly with each rental. In turn, the 14% VAT on the rental is regarded as an input tax and may be written off against any output tax collected.
The flexible nature of rental agreements allows for provisions such as insurance and maintenance to be included within the monthly payments.