Introduction to Commercial Hire Purchase / Hire Purchase / CHP
A Commercial Hire Purchase / Hire Purchase / CHP is a type of commercial lease used to finance motor vehicles. The financier usually purchases the vehicle on behalf of the customer. The customer then makes regular monthly repayments for exchange of use of the vehicle. Upon the final payment to the financier the title of the goods becomes that of the customer and no further repayments are required.
There can be additional Tax advantages for those customers that operate under the Accrual method Accounting as a Commercial Hire Purchase provides the business with ownership of the goods and therefore provides the business with the ability of claiming the full GST amount as Tax input credits at time of purchase.