• Lease expenses

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    Warning:

    This information may not apply to the current year. Check the content carefully to ensure it is applicable to your circumstances.

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    Did you have lease expenses in your business?

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    Yes, Read on.

    You need to know

    This is expenditure incurred through both financial and operating leases on leasing assets such as motor vehicles and plant. Do not include the cost of leasing real estate (show this cost at Rent expenses.

    In some circumstances, lease expenses may be debt deductions for the purposes of the thin capitalisation rules.

    Note

    If you include an amount of lease expense which is not allowable as a deduction, such as amounts disallowed under the thin capitalisation rules, you will need to add back the amount at H Expense reconciliation adjustments in the Reconciliation items section on your schedule.

    Expenses incurred under a hire purchase agreement are not lease expenses. Such expenses are dealt with at H Expense reconciliation adjustments in the Reconciliation items on your schedule.

    Special rules apply to leased cars if the cost of the car exceeds the car limit that applies for the financial year in which the lease commences. The car limit for 2005-06 is $57,009. If you lease a car that is subject to the special rules, the reconciliation between the lease expense and the tax treatment is carried out at H Expense reconciliation adjustments in the Reconciliation items section.

    Records you need to keep

    List the assets leased and keep full details of leasing expenses for each item - including motor vehicles - and details of any private use. Leasing expenses of certain cars fall under the substantiation rules.

    Completing this item

    Step 1, Write your total primary production lease expenses at Lease expenses in the Primary production column, item P8 on page 3 of your schedule. Do not show cents.

    Step2, Write your total non-primary production lease expenses at Leaseexpenses in the Non-primary production column. Do not show cents.

    Step3, Add up your primary production and non-primary production lease expenses and write the total at J.

    Last modified: 01 Sep 2006QC 18499