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Apple just made one of the biggest changes ever to how it sells its products — and it’s a gift for anyone learning bookkeeping, because it’s a textbook example of the difference between financing an asset and leasing one. Let’s unpack Apple Upgrade, and what the shift means for tax and bookkeeping.
What Apple Announced
On 28 July 2026, Apple launched Apple Upgrade in the United States — a hardware leasing program provided by Klarna (yes, the same Klarna from our recent article about AI in live chat). Eligible customers can now lease
- an iPhone from US$17.99 a month,
- an Apple Watch or iPad from US$11.99, and
- a Mac from US$24.99,
choosing one or two year terms for iPhone and Watch, and two or three year terms for Mac and iPad.
You can read the full details in Reuters’ coverage:
At the end of the lease you have three choices:
- upgrade to the newest model by starting a new lease,
- buy your current device with a one-time payment, or
- hand it back and walk away.
Crucially, Apple Upgrade replaces Apple’s old in-house financing options — the iPhone Upgrade Program and iPhone Payments. And that replacement is where the accounting lesson lives.
From Buying-in-Instalments to Renting-With-an-Option
Under the old iPhone Payments model, you were buying the device on an instalment plan. From day one, the phone was yours — you were simply paying it off over 24 months. In accounting language, that’s the territory of a purchase financed by debt, cousin to the capital (finance) lease: the asset belongs on your books.
Apple Upgrade flips the model to what accountants would recognise as an operating lease. You never own the device during the lease — you’re paying for the use of it, month by month, and at the end you hand it back or upgrade.
The option to buy it outright with a one-time payment at the end works just like the balloon or residual payment on a car lease: a lump sum that converts “renting” into “owning” at the finish line.
Same phone, same monthly outflow of cash — completely different bookkeeping.
How the Bookkeeping and Tax Treatment Differ
Say a small business gets a laptop for its office administrator. Here’s how the two models differ in the books:
If the business buys or finances the device (the old model): The laptop is recorded as an asset on the Balance Sheet, and it goes onto the asset register. It doesn’t hit the Profit and Loss all at once — instead it’s depreciated over its useful life, with depreciation entered via journal entries (or, for eligible Australian small businesses, claimed under instant asset write-off rules). If it was financed, there’s also a liability to record, and each payment must be split between reducing the loan and interest expense — with only the interest portion being deductible.
If the business leases the device (the new Apple model): There’s no asset and no loan on the books at all. Each monthly payment is simply coded as a lease or rental expense on the Profit and Loss, generally deductible as it’s incurred, with GST claimed progressively on each payment rather than up front. Nothing to depreciate, nothing on the asset register — unless you pay the balloon at the end, at which point you’re buying a second-hand asset and it gets capitalised at that price.
For bookkeepers, the practical difference shows up everywhere:
- the chart of accounts you code payments to,
- whether journal entries and depreciation schedules are needed,
- how GST is claimed, and
- what appears when you reconcile the bank feed each month and see that recurring Klarna payment.
These are exactly the skills covered in our Xero Course for Beginners & MYOB Beginners Courses which covers:
- Journal Entries,
- Bank Reconciliation & End of Month Course
- asset purchases and depreciation
And recognising and correctly coding those recurring lease payments as they land in the accounts? That’s the daily transactions work we teach.
My Honest Take: The Best Phone Is the One You Keep
Here’s an editorial note, because I believe in practical money sense as much as bookkeeping technique. Leasing programs like Apple Upgrade are built around the assumption that you’ll upgrade every year or two — that’s the treadmill they put you on, and it’s why the “upgrade” option is listed first.
My view? Keep your phone as long as you can. A well-cared-for device happily lasts four, five, even six years, and the cheapest phone you’ll ever have is the one you already own, fully paid off, costing you nothing a month. Perpetual leasing means perpetual payments — and just like the software subscriptions we’ve written about before, those monthly amounts quietly add up to far more than the thing is worth.
Apple Upgrade is US-only for now, but these models have a habit of crossing the Pacific. When it arrives here, the businesses using it will need bookkeepers who understand exactly what those Klarna payments are — and now you do.
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