With the Australian Taxation Office’s changes to General Interest Charges (GIC) taking effect from July 1, 2025, now is the perfect time to assess your finances and explore how Yellowgate Group can help clear your tax debt.
If you have an unpaid tax debt with the ATO, it’s about to get more expensive.
That’s because the Australian government has passed a law preventing taxpayers and businesses from claiming tax deductions for GIC incurred after July 1, 2025.
This means that if you owe an outstanding tax debt, you can no longer use it to reduce your tax bill by claiming the interest charges as a tax deduction.
That’s the bad news.
The good news is Yellowgate Group can help clients impacted by the new GIC laws to free up equity in their existing equipment, to help clear their tax debt.
The company’s Rent Now, Buy Later solution allows users to unlock the equity in their existing equipment and convert it into cash.
It does this by purchasing customers’ equipment and renting it back to them on a 12-month Rent Now, Buy Later plan.
With equipment rental being a tax-deductible operational expense, it means businesses can still utilise the equipment needed for revenue-generating activity, clear their tax debts with the equity in their equipment, and claim the rental payments as an operating expense.
But the benefits of Rent to Own equipment don’t stop there. There are additional tax advantages of utilising a Rent to Own model to source heavy machinery, rather than going direct to market and buying it outright.
The key benefits
• Tax-deductible rental payments
As mentioned above, unlike traditional loans or leases – where only the interest component may be deductible – rental payments under a Rent to Own agreement are classified as operational expenses.
This means the full rental amount may be claimed as a tax deduction, lowering taxable income and improving year-end financial outcomes.*
• Off-balance sheet equipment
Rent to Own equipment is generally not recorded as a liability on balance sheets during the term of the rental agreement.
This can improve financial ratios and make a business more attractive to lenders, investors, or project partners. It also reduces administrative burdens associated with asset depreciation tracking for financial departments.
• Deferred capital outlay
By deferring the outright purchase of equipment, businesses can manage cash flow more effectively and avoid triggering immediate capital expenditure (CapEx) limits. This is particularly advantageous during periods of rapid growth, seasonal demand, or while awaiting project approval.
• GST and input tax credits
If a business is GST-registered, it may be able to claim GST credits on the rental payments. This further enhances cash flow and reduces the net cost of equipment access.
Who benefits from Rent To Own machinery?
There are plenty of reasons for businesses to choose an alternative Rent to Own pathway to asset ownership over simply buying equipment outright with finance.
Many such businesses:
- Operate under short-term or rolling contracts
- Need to preserve cash reserves for labour or project costs
- Have only recently started and would like to avoid major capital commitments
- Are looking to maximise deductible expenses
- Need access to new equipment without impacting credit lines
- They’re also operating across a range of industries and fields, including but not limited to:
- Construction and civil engineering
- Earthmoving and excavation
- Mining operations
- Road building and infrastructure projects
- Agriculture and land development
These are all industries that often face tight project timelines and shifting capital budgets, making Rent to Own construction equipment an obvious tactical advantage in managing both machinery access and the tax efficiencies the model generates.
How Rent To Own machinery works in practice
Let’s say you’re a construction company looking to use a Rent to Own strategy to secure a new front-end loader without exhausting your CapEx limit.
You simply specify the loader you need, Yellowgate will source and purchase it on your behalf, then rent it back to you on a 12 month agreement. You use the loader to generate revenue and maintain it throughout the 12 month term, then decide whether to continue renting, purchase or return the loader at the end of the rental period.
You’re able to claim each rental payment as a deductible expense – improving your year-end financial position.
If you choose to purchase the loader, a portion of your rental payments are applied as a reduction to the purchase price, offering a smarter pathway to ownership.
Using Yellowgate’s Rent to Own solution to acquire your loader means you can preserve your working capital, leave room in your budget for other projects, and reap the tax and financial benefits of not automatically choosing to purchase equipment outright.
Talk to Yellowgate
The advantages of Rent to Own machinery and construction equipment go far beyond mere affordability.
For growth-focused businesses and those looking to limit their CapEx, it’s a model that offers a smart, scalable way to access essential machinery while optimising the tax benefits over a 12-month period.
It’s also a model that allows businesses to get on the front foot and clear any lingering tax debts ahead of the new GIC legislation coming into effect from July.
For more information about Yellowgate Group’s Rent to Own solution, visit the website ygg.com.au; call 1300 225 594; or email sales@ygg.com.au
*All taxation and accounting considerations are general advice only. Seek independent advice from your accountant before making any decision based on this information.