Australian Securities and Investments Commissions.

Australia Credit Licence (ACL)

A Licence that authorises the licensee to engage in particular Credit Activities.


Anything you own that is valuable or useful. Net assets are what remain after your total liabilities have been subtracted from your total assets

Australian Business Number ( ABN)

An identifier for dealings with the Australian Taxation Office and for future dealings with other government departments and agencies.

Business Activity Statement

A single form used to report business tax entitlements and obligations, including the amount of GST payable and your input tax credits.

Cash Flow Statement

The Cashflow statement shows the movement and availability of cash through and to the business over a given period, certainly for a trading year, and often also monthly and cumulatively. The availability of cash in a company that is necessary to meet payments to suppliers, staff and other creditors is essential for any business to survive, and so the reliable forecasting and reporting of cash movement and availability is crucial.

Chattel Mortgage

A Chattel Mortgage is essentially a mortgage over the goods to be financed. It is classed as a cash sale in that the goods automatically become yours on purchase and the finance company takes a mortgage over the chattels. However, for tax purposes you can claim depreciation, running costs and Interest paid against your business income. The Chattel Mortgage allows businesses to claim the full input tax credit from GST incurred expenses immediately ( next BASS Statement).Always seek advice from your accountant in this regard.

Chattel Mortgage is a flexible finance option in that you have the ability to either finance the full purchase price or alternatively you can include an upfront deposit or trade in to reduce your rental commitment, while residual payment may also be placed to represent the vehicles end value.

CRAA (Credit Reference Association of Australia)

This organisation now formally known as Baycorp Ltd, holds a record of all credit applied for , any defaults and past payment problems.

Credit File

A credit file records information about people who have been credit active during the past seven years. Files are also kept for companies and businesses. Details held on file include when credit was applied for, in whose name it was sought, from what body or institution it was sought, the amount sought, type and purpose of credit. It also includes information necessary to identify you as well as information of relevance for credit assessment purposes such as personal details ( name, address, sex, date of birth, drivers licence number) overdue accounts, bankruptcy details,court judgements, details of directorships or properitorships etc. No credit provider is allowed to access files without the permission of the applicable individual

Commercial Hire Purchase (CHP)

Under a Commercial Hire Purchase agreement, the Hirer ( You) pays a fixed monthly hire charge to the finance company for a defined period of time. Once all hire charges have been paid, the ownership of the goods transfers to the Hirer ( You). Until all hire charges have been paid, the legal title to the goods remains with the Finance company. Rental payments can be tailored to meet your businesses particular income streams throughout a financial year. This gives you the flexibility of managing your cash flow in a more effective manner. Under a hire purchase agreement, the Hirer is entitled to claim the terms charges of the hire cost and depreciation on the goods from their pre tax earnings ( Independent taxation advice to be sought)

Consumer Credit

Consumer credit applies to the provision of credit if:

(a) the debtor is a natural person or a strata corporation; and

(b) the credit is provided or intended to be provided wholly or predominantly:

(i) for personal, domestic or household purposes; or

(ii) to purchase, renovate or improve residential property for investment purposes; or

(iii) to refinance credit that has been provided wholly or predominantly to purchase, renovate or improve residential property for investment purposes; and

(c) a charge is or may be made for providing the credit; and

(d) the credit provider provides the credit in the course of a business of providing credit carried on in this jurisdiction or as part of or incidentally to any other business of the credit provider carried on in this jurisdiction.

The predominant purpose for which credit is provided is:

(a) the purpose for which more than half of the credit is intended to be used; or

(b) if the credit is intended to be used to obtain goods or services for use for different purposes, the purposes for which the goods or services are intended to be most used.

Consumer Credit Regime

The consumer credit regime which will apply under the National Consumer Credit Protection Act, the National Credit Code (NCC) and associated regulations.

Consumer Lease

For the purpose of the NCC, a consumer lease is a contract for the hire of goods by a natural person or strata corporation under which that person or corporation does not have a right or obligation to purchase the goods.

Credit Activities

These include:

A person cannot engage in credit activities unless they are registered, licensed or a representative of a person or entity registered or licensed with ASIC to engage in credit activities.

Credit Assistance

Suggesting or assisting a consumer to remain in, apply for or increase a particular credit contract or consumer lease.

It doesnt matter whether credit assistance is provided on your own behalf or on behalf of another person.

Credit Assistance Provider

The person who provides Credit Assistance.

Credit Contract

A 'credit contract' (National Credit Code - regulated Credit Contract [Consumer Credit]) is a contract where:

Credit Licensed Person/Entity

A person or entity licensed with ASIC to engage in credit activities - that is, the person or entity holds an Australian Credit Licence (ACL).

Credit Provider

A person or entity that provides credit e.g. lenders such as banks and credit unions. Includes a prospective credit provider.

Credit Registered Person/Entity

A person or entity registered with ASIC to engage in credit activities.

Credit Representative

A registrant or licensee may give a person or corporate entity a written authority to engage in specified credit activities on behalf of the registrant or licensee. An authorised person is a credit representative, and an authorised corporate entity is a corporate credit representative.

The registrant or licensee is responsible for the actions of their credit representatives.

Credit Services

Providing credit assistance to a consumer or acting as an intermediary between a lender and a consumer are credit services.

Current Asset

Includes cash, short-term deposits, customers’ accounts, stock (includes work in progress, raw materials and finished goods), that will be converted into cash during the normal course of business, within a year.

Current Liabilities

Short-term debts such as bank overdraft, creditors and provisions set aside to pay taxation and other commitments (for example, holiday or long service leave) and expected to come due within one year of the Balance Sheet


A person or business who owes money.


A failure to make agreed payments of interest or principal

Direct Debit

An instruction to a bank to allow money to be withdrawn from an account by someone other than the account holder. This is usually used to pay bills, and the amount withdrawn can vary with each payment.

Depreciation Expense

Gradual reduction of the value of a fixed asset and gradual application of this cost to the expenses of a business over the useful life of the asset.

Document Fee

A fee charged by some lenders to cover the cost of preparing lease documents.

Early Termination Penalty

The fee charge to a lessee in the event of an early termination of a lease. Penalties vary from lease to lease and are determined at lease inception

Financial Statements

Formal reports prepared from accounting records describing the financial position and performance of the business.

Gross Profit

The excess of net sales over cost of goods sold usually expressed as a percentage.


You are an intermediary if, in the course of, as part of, or incidentally to, a business, you:

(a) act as an intermediary (whether directly or indirectly) between a credit provider and a consumer wholly or partly for the purposes of securing a provision of credit for the consumer under a credit contract for the consumer with the credit provider; or

(b) act as an intermediary (whether directly or indirectly) between a lessor and a consumer wholly or partly for the purposes of securing a consumer lease for the consumer with the lessor.

It doesn't matter whether you act as an intermediary on your own behalf or on behalf of another person.


The value of all the stock of physical items that a business uses in its production process or has for sale in the ordinary course of doing business.


Document which shows the customer charges for goods delivered or work done.


A lease is a finance agreement whereby the Lessee( you) leases the goods from the Lessor( finance company) for a defined period of time for a monthly fixed lease rental amount. At the end of the lease agreement, you have the option of purchasing the goods for the pre determined residual value or returning the goods to the finance company. Lease rental payments can be tailored to meet your businesses particular income streams throughtout a financial year. This gives you the flexibility of managing your cashflow in a more effective manner. Providing the goods are used fully in your business, lease rental payments are generally tax deductible from pre tax earnings ( Independent taxation advice should be taken )


The individual or company that uses the vehicle/equipment.


The individual or company that purchases the vehicle/equipment and leases it to the lessee.


See the credit Licensed Person/Entity.

Net Profit

The remainder after all expenses of an accounting period are deducted from all revenue of the same period

Operating Lease

Is where the finance company purchases the equipment and rents it to you for an agreed payment schedule over a fixed term. It works best for financing high depreciation , short span new technologies such as computers, telephony and other office equipment which generally have a short lifespan due to high obsolescence.

How it works –

Term : The term can be from 1-5 years and must be in accordance to ATO guidelines

Deposits: Deposits are not required. The full purchase price must be financed

Residual/Balloon : You must have a residual payment as the last payment option of your finance agreement according to ATO guidelines. This residual value is determined by the finance company and the finance company is responsible for paying it.

Owner of the goods: You have possession and use of the equipment, however, the finance company shoulders most of the risk of ownership.

Expiry of Rental Period : At the end of the Rental period, you have a number of options, namely-


The legal condition a company is placed in when an official receiver is appointed to investigate and manage its affairs.

Residual Value

The projected market value of a vehicle at the end of a lease. Also known as the lease-end value, it is established at the time of lease inception and is used to calculate your monthly payment. Residual values will vary depending upon the model you choose, the lessor, the amount of miles you anticipate driving, and particular promotions being offered on that model.

Sale & Leaseback

Assets are sold to another firm (e.g.financier) with a simultaneous agreement for the vendor to lease the asset back for a stated period under specific terms.

Tax Invoice

A document generally issued by the supplier.  It shows the price of a supply, indicating whether it includes GST, and may show the amount of GST.  It must show other information, including the ABN of the supplier.  You must have a tax invoice before you can claim an input tax credit on your activity statement (except for purchases of $50 or less).


The length of time a lease lasts.

Confused with some of the jargon? Let me help you out. Below are some words which you may have trouble understanding. Take a look at the definition and hopefully it will clear it up for you.

If it is not there give Paramount a call, so one of our friendly staff can help you with any queries.

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