An Operating Lease is a rental agreement for a specified term and kilometre limit. You avoid the risks associated with ownership and at the end of your lease agreement you return the vehicle and providing the vehicle is returned in accordance with fair wear and tear conditions and kilometre usage you have no further obligation. Rental payments are tax deductible.

This type of lease is commonly utilised for financing Tool of Trade vehicles and is popular with companies due to the Lessor having responsibility for the residual value risk on the asset. Provided the vehicle is returned in accordance with fair wear and tear conditions and the agreed kilometre limit, the Lessee has no further obligation. Rental payments are tax deductible.