Increased hire purchase costs coming

The cost of financing assets is likely to increase from April because of a tax office ruling that adds to the GST burden for credit providers, accountants warn.

The Australian Financial Review reports that a change to the tax office practice, which will cut the amount of GST credits banks and asset financiers can claim, will likely lead to increased costs to businesses as the banks and other lenders pass the cost on to customers.

From April, financiers will only be able to claim a flat GST credit, instead of claiming a refund based on an apportionment of costs, which generally means a bigger refund.