Equipment finance
Operating lease: how it works for business equipment
An operating lease is a rental agreement in which the lessor owns the equipment, carries the resale risk and rents it to you for a set term, after which you hand it back, upgrade, extend or make an offer to buy it. The rentals are generally deductible as a business expense, and a GST-registered business claims the GST in each rental on its BAS rather than up front as with a chattel mortgage. It suits equipment you will replace on a cycle, such as IT, fleet vehicles and medical technology.
- The lessor owns the equipment and carries the resale risk
- Rentals deductible; GST claimed on each rental (ATO)
- End of term: return, upgrade, extend or make an offer
- No depreciation or instant asset write-off for you, because you do not own it
What are the repayments on $50,000 of equipment finance over three years?
| Loan amount | Monthly repayment at | ||
|---|---|---|---|
| 8%p.a. | 10%p.a. | 12%p.a. | |
| $20,000 | $627 | $645 | $664 |
| $50,000 | $1,567 | $1,613 | $1,661 |
| $100,000 | $3,134 | $3,227 | $3,321 |
| $200,000 | $6,267 | $6,453 | $6,643 |
Illustrative monthly principal and interest repayments over 3 years, before fees and charges. Rates are examples, not offers; your rate depends on the lender and your circumstances. These repay the full amount. An operating lease rental is typically lower, because the lessor keeps the equipment’s value at the end; ask for the rental and the residual in the quote. Run your own numbers.
Move the sliders for your own amount, rate and term. For a balloon and the GST credit, use the full equipment finance calculator.
Equipment finance lenders a broker can compare
Lenders in our directory with an equipment finance product. The lessors that publish operating leases and rentals are in the table below.
| Lender | Products | Current rate |
|---|---|---|
| Australia and New Zealand Banking GroupMajor bank | Products:
| Current rate: ANZ rate card (opens in a new tab) |
| Commonwealth Bank of AustraliaMajor bank | Products:
| Current rate: CommBank rate card (opens in a new tab) |
| National Australia BankMajor bank | Products:
| Current rate: NAB rate card (opens in a new tab) |
| Westpac Banking CorporationMajor bank | Products:
| Current rate: Westpac rate card (opens in a new tab) |
| BankSAMajor-bank brand | Products:
| Current rate: BankSA rate card (opens in a new tab) |
| Suncorp BankMajor-bank brand | Products:
| Current rate: Suncorp Bank rate card (opens in a new tab) |
| Bank of QueenslandTier-2 bank | Products:
| Current rate: BOQ rate card (opens in a new tab) |
| Bendigo and Adelaide BankTier-2 bank | Products:
| Current rate: Bendigo Bank rate card (opens in a new tab) |
| Angle FinanceSpecialist | Products:
| Current rate: Angle Finance rate card (opens in a new tab) |
| EarlypaySpecialist | Products:
| Current rate: Ask a broker |
| GetCapital (Shift)Specialist | Products:
| Current rate: Ask a broker |
| ScotPacSpecialist | Products:
| Current rate: Ask a broker |
Inclusion is editorial reference, not a recommendation. Rates change often, so we only show a rate we captured from the lender's own page in the last 60 days, with a link to that page; otherwise we link to the lender's rate card where it publishes one. The broker you are matched with compares the lenders on their own panel.
See all 13 equipment finance lendersWho offers operating leases?
Among the banks we checked, the lease products published are finance leases (NAB, Westpac, Bendigo Bank, BOQ). The operating leases and rentals we found come from specialist lessors, manufacturers and bank partners. Checked between 20 and 30 September 2026; terms change without notice.
| Lessor | What it publishes |
|---|---|
| DLL (via Rabobank) | Operating leases for farm equipment, alongside goods mortgages, finance leases and hire purchase |
| Grenke | Classic Lease for small-ticket IT and telecoms; at the end of the term, return, purchase or continue leasing |
| CommBank with CHG-MERIDIAN | Healthcare equipment leasing: 100% of the cost financed, repayments over the asset's effective life, and upgrade, return or renew at the end |
| HPE Financial Services | Technology renewal and asset disposition services for end-of-term HPE hardware |
| SilverChef | 12-month hospitality equipment rental; change, upgrade or buy at any time; return after 12 months with no penalty |
How does an operating lease work?
The lessor buys the equipment and rents it to you for an agreed period, typically one to five years. It prices the rental from the equipment's cost, the term, and its own estimate of what the equipment will be worth at the end. Because the lessor keeps that end value and the risk that goes with it, operating lease rentals are typically lower than equivalent chattel mortgage or hire purchase repayments.
You use the equipment for the term and look after it as the contract requires. At the end you return it and walk away, upgrade to newer equipment under a new lease, extend, or make an offer to buy it.
Operating lease vs finance lease: what is the difference?
| Operating lease | Finance lease | |
|---|---|---|
| Value risk at the end | The lessor's | Mostly yours |
| Term | Shorter than the asset's life | Most of the asset's life |
| End of term | Return, upgrade, extend or make an offer | A residual set at the start: pay it, refinance it or return the asset, as the contract allows |
| Typical use | Equipment you will replace on a cycle | Equipment you expect to keep |
Lenders use the labels differently, so read the contract: Westpac publishes its finance lease as one where you return the asset when the lease ends, while Bendigo Bank's finance lease carries a mandatory residual and lets you make an offer to buy. The finance lease guide covers residuals in detail.
Tax and GST on an operating lease
The rentals are generally deductible as a business expense to the extent you use the equipment in the business; Westpac's page lists rental instalments under a lease alongside interest and depreciation under a loan. Because you do not own the equipment, you do not claim depreciation or the instant asset write-off.
For GST, the ATO treats each lease payment as a separate purchase: a GST-registered business claims one-eleventh of each rental as a credit on its BAS, in the period the rental is paid or invoiced. If you buy the equipment at the end, that purchase is a separate transaction, and you may be able to claim the GST in its price.
Is an operating lease off balance sheet?
Not always any more. The AASB 16 Leases standard, effective for annual periods beginning on or after 1 January 2019, requires lessees that apply it to recognise most leases on the balance sheet. Many small and medium businesses report under simplified frameworks, so whether a lease stays off your balance sheet depends on how your business reports; your accountant can confirm.
When does an operating lease suit a business?
- IT and technology on a three-year refresh, where a laptop is worth a fraction of its price at the end.
- Medical technology such as imaging and diagnostics that dates as the technology moves.
- Fleet vehicles and forklifts replaced on a cycle.
- Hospitality equipment for a concept you are still testing.
For equipment you will run until it is worn out, a chattel mortgage usually costs less over its life.
Related guides
Other structures and assets.
WARNING: This comparison rate is true only for the example given and may not include all fees and charges. Different terms, fees, or other loan amounts might result in a different comparison rate. Comparison rates are calculated on a secured loan of $150,000 over 25 years for home loans, a loan of $30,000 over 5 years for car and personal loans, and $50,000 over 5 years for equipment finance, unless the lender states another basis.
Operating lease FAQs
What is an operating lease?
What is the difference between a finance lease and an operating lease?
Are operating lease payments tax deductible?
What happens at the end of an operating lease?
Is an operating lease off balance sheet?
Who is an operating lease best for?
Can I get an operating lease for used equipment?
How much is an operating lease on $50,000 of equipment?
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