When someone says they want to lease a forklift, they usually mean one of four things: hire it for a while and hand it back, rent it with a path to owning it, take a finance lease where the lender owns the machine, or buy it with a chattel mortgage and own it from day one. Each one changes what you pay, who owns the forklift, and how your accountant treats it.
This guide sets out what each structure is, what drives the cost, and which tends to suit which business. It is general information rather than financial advice, and the tax treatment always depends on your circumstances, so talk to your accountant before you sign anything.
What People Mean By Forklift Leasing
The words get used loosely in this industry.
Here is the distinction that matters. In every arrangement, ask two questions:
- Who owns the machine?
- What happens at the end of the term?
| Structure | Who owns it | At the end | Best for |
|---|---|---|---|
| Hire or rental | We do | It comes back to us | Short jobs, peaks, trials |
| Rent-to-own | We do, until you buy it | You own it | Ownership without a deposit |
| Finance lease | The lender | Pay the residual, refinance or return | Upgrading on a cycle |
| Chattel mortgage | You do, from day one | You already own it | Keeping the machine long-term |
Forklift Hire
Hire is the simplest arrangement. You pay a rate, we deliver the machine, we maintain it, and it comes back when you are done. A short-term hire suits a seasonal peak, a one-off project, or a stint covering a machine in the workshop. Long-term hire suits ongoing operations where you would rather not tie up capital in equipment.
The advantages are the ones you would expect. There is no capital outlay, maintenance sits with us, and if the machine goes down, we sort it out. If your requirements change, you scale up or down without owning the wrong forklift.
The trade-off is that you build no equity. Over a long enough run, hiring costs more than owning. Where that crossover sits depends on the machine and the hours, which is best discussed rather than treated as a rule of thumb.
Rent-To-Own
Rent-to-own, sometimes called lease-to-own, sits between hiring and buying. You pay a regular amount, use the machine, and at the end of the term, the forklift is yours. It suits businesses that want to own equipment but would rather not pay a deposit or a lump sum upfront.
It works well when you are confident about the machine and the workload. You get a known monthly cost, work toward an asset rather than paying rent, and avoid the upfront capital hit.
It works less well if your needs might change. You are committing to a specific machine for a set period, so if the job changes or the forklift turns out to be the wrong size, you have less room to move than you would on hire.
Finance Lease
Under a finance lease, a lender buys the forklift and leases it to you for an agreed term. You have full use of the machine, the lender holds legal title, and at the end, you generally have three options: pay the residual and take ownership, refinance, or hand it back.
Monthly payments are often lower than those for a loan on the same machine because you are paying toward the gap between the purchase price and the residual value rather than the full amount. That helps cash flow.
Two things to understand. Because you do not own the machine, you cannot claim depreciation on it. And the residual is a real obligation at the end of the term, so it pays to know the number before you start rather than at the end.
Chattel Mortgage
A chattel mortgage is a loan in which you take ownership of the forklift at settlement, and the lender registers a security interest in it until the loan is repaid. It is the most common asset finance structure in Australia, accounting for the majority of business equipment and vehicle finance written each year.
It suits businesses that intend to keep the machine. You own the asset, you build equity, and you can sell or modify it without asking a lender. For a forklift that will run for years, that usually stacks up better on total cost than renting the same machine over the same period.
The trade-off is that you carry the machine. Maintenance, resale and the risk of ending up with equipment you no longer need all sit with you rather than with us.
How The Tax Treatment Differs
In broad terms, and depending on your circumstances:
- Under a chattel mortgage, a GST-registered business generally claims the GST credit on the purchase price in the BAS period in which the machine is acquired, rather than spreading it over the term. Interest is typically deductible, and the machine is depreciated.
- Under a lease, GST is generally claimed on each payment as it is made. The total recovered over the term is similar. The difference is timing, and on a machine worth tens of thousands, that timing can matter to your cash flow.
- Under a lease, you cannot claim depreciation, because you do not own the machine. The lease payment itself is generally deductible instead.
- Under hire, the rate is generally treated as an operating expense.
One point that catches people out: the ATO looks at the substance of the agreement. Where an agreement includes an option to purchase, or the residual does not reflect a genuine estimate of the machine’s value at the end, it may be treated as a hire purchase rather than a lease, which changes what you can deduct. Your accountant will read the actual terms.
The other point worth noting is that the off-balance-sheet advantage often associated with leasing has narrowed. Businesses that prepare financial statements under Australian Accounting Standards generally bring most leases onto the balance sheet in accordance with AASB 16. Whether that affects you depends on how your accounts are prepared.
The Instant Asset Write-Off And Forklifts
This one deserves a straight answer, because it gets waved around a lot in equipment finance.
The instant asset write-off allows eligible small businesses to immediately deduct the full cost of a qualifying asset rather than depreciate it. Two things limit its usefulness for a forklift:
- It applies per asset under a threshold, and most forklifts cost more than that threshold. Assets at or above it generally go into the small business pool and are depreciated at 15 per cent in the first year and 30 per cent each year after. So for a typical machine, the write-off is often not the deciding factor.
- The write-off requires you to own the asset. Under a finance lease, the lender owns the machine, so it does not apply. A chattel mortgage or a purchase would.
The threshold has also been set year by year rather than permanently, and the position for the current financial year has been subject to legislation before Parliament. Your accountant will know where it stands on the day you buy. Treat any figure you read online, including ours, as a prompt to ask them.
What Drives The Cost
There is no single rate for a forklift, because the machine and the job determine the number. The main drivers are:
- Capacity and mast height. A 2.5 tonne standard mast costs less to run than a 5 tonne container mast.
- Power type. Electric, LPG, and diesel differ in both rates and running costs.
- Term. Longer commitments generally carry lower rates than a few days.
- Hours. Single shift and multi-shift operations are priced differently.
- Attachments. Rotators, side shifts, slippers and jibs add to the machine and the price.
- Delivery. Distance and access affect transport, and we quote upfront.
- Condition. New and used machines sit at different points.
For finance, the rate also depends on your business, the term and the residual.
Work Out What Suits Your Site
Tell us the job, the hours and how long you need the machine, and we will explain which structure fits and what it costs. We hire, sell, finance and service across Australia’s East Coast from our Nerang and Yatala workshops.
Explore our range of forklifts available for hire, or call the team on 07 5596 5777.
