Feature | Instalment Sale Agreement | Financial Lease Agreement | Full Maintenance Lease Agreement |
Initial payment | Corporate - negotiable
Consumer - subject to Credit Agreements Act (CAA) | Corporate - negotiable
Consumer - subject to Credit Agreements Act (CAA) | Corporate - negotiable |
Ownership | Owned by Scania Credit SA. Ownership passes to credit receiver automatically once the goods have been fully paid for. | Owned by Scania Credit SA. Ownership is one of the options available on termination (or earlier if agreed by Scania Credit SA) | Owned by Scania Credit SA. |
Repayments | Corporate - flexible payment structures.
Consumer - amount of individual instalments may not differ by more than 10% of each other. | Corporate - flexible payment structures.
Consumer- amount of individual lease payments may not differ by more than 10% of each other. | Based on the time period and estimated kilometers range. Repayments are subject to variation if the actual kilometers' travelled exceed the estimated kilometers range. |
Period | Corporate- flexible payment structures.
Consumer - subject to the requirements of CAA. | Corporate - generally 60 months maximum.
Consumer - subject to the requirements of CAA. | Corporate - generally 60 months maximum. |
Value Added Tax (VAT) | Capitalised into principal debt or payable on commencement in cash. A VAT invoice will be issued upfront for use by vendors who are able to claim an input credit from the Receiver of Revenue in respect of the VAT paid on the acquisition of the goods. | Capitalised into principal debt or payable on commencement in cash. A VAT invoice will be issued upfront for use by vendors who are able to claim an input credit from the Receiver of Revenue in respect of the VAT paid on acquisition of the goods. | Payable on each rental at the current rate in accordance with practice note 2, the statement of account, together with a copy of the agreement is sufficient proof for use by vendors who are able to claim an input credit from the Receiver of Revenue in respect of the VAT paid on each rental. Where an input credit is denied on the leasing component of the rental, an input credit may still be claimed on the maintenance component of the rental. |
Tax liability on termination
(where rentals have been deducted and/or wear and tear allowance claimed in terms of the Income Tax Act) | Purchaser will be liable for recoupment tax in terms of Section 8(4) when the asset is sold for a price in excess of the tax value. The taxable recoupment is the difference between the selling price (up to a maximum of original cost) and the tax value, limited to deductions previously claimed.
- Tax recoupments, however, do not apply to deductions made under Section 8(1), i.e. Car Allowance Schemes. | Lessee will be liable for liable for recoupment tax in terms of Section 8 (5) of the Income Tax Act when-
- Lessee obtains ownership of the asset for less than its market value.
- Lease is renewed at a rental per annum which is less than 10% of the deemed fair market value.
- Proceeds on disposal are rebated to lessee.
Taxation recoupments, however, do not apply in respect of deductions made under Section 8 (1) i.e. Car Allowance Schemes. | As the vehicle is returned to Scania Credit SA Vehicle and Asset Finance upon termination of agreement, there are no taxation implications. |
Trade-in | Can be traded in once all payments in terms of the agreement have been met. | Can be traded in once all payments in terms of the agreement have been met. | Not applicable. |
End of agreement options
(on expiry at the end of the contract period) | Ownership passes automatically. | The Usury Act afford the Following options:
Where all monies outstanding have been paid, including any balloon payment.
- Goods can be returned.
- Ownership can be acquired.
- The agreement can be renewed at an annual rental.
If there is an amount outstanding, including any balloon payment:
- An extension of the lease may be negotiated with Scania Credit SA
Tax implications depend on option chosen. | - To return vehicle to Scania Credit SA in agreed condition.
- Negotiate with Scania Credit SA to become legal owner by purchasing vehicle. |
Vat implications on end of agreement options
(on expiry at the end of the contract period) | Ownership passes automatically - no VAT. | - Ownership - provided all monies have been paid, ownership may be obtained at zero value. The supply is made for no consideration, effectively no VAT is paid.
- Return the goods - there are no VAT implications for the lessee.
- Enter into a rental agreement - VAT will be levied on each rental payment.
- Extend the lease - the extension will be considered as part of the original lease and no VAT will be charged. | - Goods can be purchased at book value plus VAT.
- If the goods are returned to Scania Credit SA, there are no VAT implications for the customer. |
Interest rates
*Where the principal debt is less than R500 000, the rates are subject to the maximum limit in terms of the Usury Act. | Market rates apply*
These may be fixed or linked to Prime or Term Lending Base Rate. | Market rates apply*
These may be fixed or linked to Prime or Term Lending Base Rate. | Monthly rentals are quoted and are subject to variations in the Prime Rate. |
Effect on balance sheet | Asset must be capitalised and liability reflected on the balance sheet. | Asset should be capitalised to accord with GAAP (Generally Accepted Accounting Practice) and the liability reflected on the balance. | This agreement conforms to AC105's definition of an operating rental and therefore the asset is off-balance sheet, but this must be confirmed with your auditors. |
