The Rural Voice, 1987-04, Page 61SASKET
Eliminates
bale thrower
and expensive
wagons. Two
Hay Baskets
will do the
work of three
wagons.
Hay
Basket
Features: on the go turning on raked corners • up to 100 -bale
capacity • full width rear gate for easy unloading • bales will not slide
out of chute when disconnected from the baler.
19 Martha Street,
Cako Hawksville, Ont. NOB 1X0
519-699-4545
COMING SOON!
The All New HONDA RT5000
Utility Tractor
FEATURES:
4 -wheel drive
4 -wheel steering
front & rear PTO
8 forward &
4 reverse gears
full front, middle, &
rear hydraulic lift
roll bar
full range
of attachments
Come and see us now — your Full Line
HONDA POWER PRODUCT DEALER
HONDA
Power
Equipment
LYNN HOY ENTERPRISES LTD.
Hwy. 86 East
Wingham, Ont.
519-357-3435
60 THE RURAL VOICE
MACHINERY
LEASING OR BUYING:
ADVANTAGES VARY
by Michelle Timko
Leasing farm equipment is not
always cheaper than purchasing. The
benefits depend on the individual's
financial position and the financing
package offered.
High interest rates have made farm
equipment leases popular in recent
years. In 1986, as much as 31 per
cent of financing for combines, trac-
tors, planters, and tillage tools was
through leasing arrangements.
Although many advantages of leas-
ing can be cited, the main determinants
are interest rates and the tax bracket of
the farmer. For tax purposes, a lease
payment can be deducted as a direct
expense. A farmer in a high tax
bracket is more likely to require the
deduction to decrease tax payable.
"Many advertised
lease arrangements
are glorified
finance plans."
A true lease, or operating lease, is
designed so that the equipment is re-
turned to the company upon termin-
ation of the agreement. The farmer
never owns the equipment and is not
entitled to tax deductions such as
capital cost allowance (CCA) or the
investment tax credit.
At the end of the term, however,
the farmer is often given the option to
purchase the machine at fair market
value or at a predetermined price.
Only after the machine is purchased
can the farmer deduct CCA. The
investment tax credit cannot be
deducted because when the machine is
purchased at the end of the lease period
it is classified as used. Other options
are returning the equipment and
starting a lease on a newer model, or
financing the now used equipment.
"Many advertised lease arrange-
ments are glorified finance plans," says
Jack Van Bussel of Huron Tractor in
Exeter. Many consider the financing
of a machine over a few years with a
balloon payment (a large final
payment) at the end of the time period
to be a lease. But because this is not a
(cont'd on page 62)