Tax Considerations When Deciding to Buy or Lease an Industrial Truck

Usually, when a company looks to build their industrial truck fleet, cash flow is the leading decision maker. However, if you’re looking to buy or lease an industrial truck, tax savings should also be taken into account. Many fleets find that varying the structure of each financing deal is a good way to hedge savings over the long run. While cash flow is certainly important, long term tax savings can also be achieved by making a few extra calculations when it’s time for the decision whether to buy or lease your next industrial truck.

Commercial  leasing for industrial trucks is an increasingly popular financing option for corporate accounts. For tax purposes, Revenue Canada currently classifies truck leases into two types: the operating lease and the capital lease. With a capital lease, where the vehicle is bought out at the end of the lease term, the tax calculations are treated similar to a purchase, and the interest and capital cost allowance is fully deductible. When looking at leasing equipment rather than vehicles, generally speaking, the entire operating lease is deductible. However, it’s important to keep in mind that Revenue Canada reserves the right to declare that a lease does not qualify within their definition of a operating or capital lease.

Consult with your accountant to look into the specific cash flow and tax implication benefits of each financing arrangement under consideration. Our reliable Hino truck sales agents can provide further recommendations for investigating your finance options, and we look forward to the opportunity to get your fleet on the road while maximizing your corporate tax benefits.