Question

Tax considerations give a definite advantage to hire purchase financing option”
Do you agree? Explain​

Answer 1

Tax considerations advantage in hire purchase option

Explanation:

The following are Tax benefits in hire purchase option.

• Using a hire purchase program also requires contract management, so the client doesn't have to worry about having to pay for any costly cost of repair that might occur. Expenditure on rental payments can be more valuable for tax than purchasing and depreciating the equipment.
• In the case of hire-purchase transactions, the hire-vendor pays tax on the income inherent in the hire installments, not on the rentals as a whole. Therefore, the tax is only paid on the income, and not on the inflow.