188体育

Suppose a Borrower wants to take out a loan of 拢10 million from a Bank for ten years at a commercial rate of interest, say 10%. If the Bank simply lent 拢10 million the Bank would pay tax on interest earnings of 拢1 million a year (after deductions for its financing and other costs). The main aim of the 鈥榠ncome-into-capital鈥� leasing schemes was to convert the interest receipt into a non-taxable capital sum. The bank then saves a 拢300,000 a year in tax (拢1 million at 30%), which competitive pressures generally ensure is partly passed on to the Borrower in the form of reduced interest costs.