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 Benefits of Leasing Equipment for Your Business
Ownership of Equipment (under the lease agreement)
Tax Implications of Equipment Leasing
Purchase Options
Goods and Services Tax (GST) and the Provincial or Harmonized Sales Tax
Multiple Equipment Purchases
Business Equipment That We Finance
Working with RBC Royal Bank's account manager and Leasing specialist team, we can provide you with a customized analysis demonstrating the potential benefits of leasing versus traditional equipment financing methods.
As lessor under the equipment lease agreement, RBC Royal Bank owns the equipment and claims the Capital Cost Allowance on any equipment that is leased. You are responsible for the maintenance and insurance costs associated with the equipment that is leased and all warranties are transferred directly to you.
Lease payments are usually 100 percent tax deductible, which allows you to deduct the payments as a business expense. Please consult with a tax adviser to determine if equipment leasing is an appropriate form of financing for your company.
The purchase option is a reasonable estimate of the Fair Market Value of the equipment at the option date determined at the beginning of the lease. In order for your company to deduct lease payments as an expense, a purchase option must be calculated and represent a true estimate of the Fair Market value.
The lessor pays all applicable taxes at the time the equipment is originally purchased. However, lease payments include GST and Provincial or Harmonized Sales Tax.
A lease line of credit may be very beneficial to your company in accommodating multiple equipment leases. Much like an operating line of credit, a lease line is an approved lease facility with a preset dollar value. This enables you to acquire equipment quickly and effectively.
RBC Royal Bank offers lease financing for a wide range of equipment in a number of different industries, including:
- Manufacturing: production equipment, material handling equipment
- Transportation: tractors, trailers, railway cars
- Construction: loaders, backhoes, cranes
- Business Services and Information Systems: computers, furnishings, fixtures, hardware, software, furniture
- Resource Equipment: logging equipment, electric shovels, compressors, drilling equipment
- Medical & Health Services: x-ray machines, ultrasound machines, furniture
- Airline: aircraft, engines, baggage carts
- Agriculture*: combines, ploughs, tractors
Under the Bank Act, banks are restricted from leasing consumer goods, passenger vehicles and light trucks.
* subject to Provincial regulations regarding availability.
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Contact your RBC Royal Bank Account Manager or call 1 800 769-2523 |
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