For businesses, car leasing may have been the preferred way to build a fleet in the past, but recent changes to reporting standards could affect that.
In effect from the financial year 2019-2020, AASB 16 – a document issued by the Australian Accounting Standards Board – lays out new bookkeeping requirements for businesses making use of leases.
Previously, the costs of these leases could be kept off the balance sheet, minimising your reportable debt. AASB 16 requires that businesses now record the costs of use of the leased asset and the associated benefits on its balance sheet.
This has two key impacts:
Firstly, it dramatically increases the amount of reporting required by businesses leasing vehicles.
Secondly, it potentially affects your ability to access credit, as your business will now have to record significantly more in debts on your books