INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART III - LIABILITY TO TAXATION  

Division 3 - Deductions  

Subdivision A - General  

SECTION 54AA   PROPERTY INSTALLED ON LEASED CROWN LAND - LESSEE DEEMED TO BE OWNER ETC.  

54AA(1A)   ``Crown lease'', ``lessee'' and ``lessor'' have extended meanings.  

The expressions ``Crown lease'', ``lessee'' and ``lessor'' are given extended meanings for the purposes of this section (see subsection (8)).

54AA(1)   When section applies.  

This section applies if:

(a) a taxpayer is the lessee of land under a Crown lease; and

(b) a unit of property is affixed to the land; and

(c) apart from this section, the taxpayer is not the owner of the property; and

(d) if the property was not already affixed to the land at the time when the taxpayer acquired the Crown lease:

(i) the taxpayer acquired or constructed the property and affixed it to the land; and

(ii) at the time when the property was first affixed to the land as mentioned in subparagraph (i), the taxpayer had not entered into a scheme:

(A) under which a person other than the lessor would become the owner of the property at a later time; or

(B) where it would be concluded that a purpose of the scheme was to provide finance to enable a person other than the taxpayer or the lessor to become the end-user of the property for the whole, or a substantial part of, the effective life of the property; and

(e) if the property was already affixed to the land at the time when the taxpayer acquired the Crown lease:

(i) the taxpayer acquired the Crown lease from a prior holder of the Crown lease; and

(ii) either:

(A) the prior holder acquired or constructed the property and affixed the property to the land; or

(B) if there have been 2 or more prior successive holders of the Crown lease - one of those prior successive holders acquired or constructed the property and affixed the property to the land; and

(iii) at the time when the taxpayer acquired the Crown lease, the taxpayer had not entered into a scheme:

(A) under which a person other than the lessor would become the owner of the property at a later time; or

(B) where it would be concluded that a purpose of the scheme was to provide finance to enable a person other than the taxpayer or the lessor to become the end-user of the property for the whole, or a substantial part of, the remainder of the effective life of the property; and

(f) section 54AB does not apply.

54AA(2)   Modification of depreciation provisions.  

The provisions of this Act relating to depreciation apply as if:

(a) the taxpayer were the owner of the property instead of any other person; and

(b) if the taxpayer acquired the Crown lease from a prior holder of the Crown lease and the property was already affixed to the land at the time when the taxpayer acquired the Crown lease:

(i) the cost to the taxpayer of the property were equal to so much of the consideration paid or given by the taxpayer for the acquisition of the Crown lease as is attributable to the property; and

(ii) the taxpayer had acquired the property under a contract entered into at the time the taxpayer acquired the Crown lease; and

(c) if:

(i) the Crown lease expires or is surrendered; and

(ii) the expiry or surrender is not followed by the grant to the taxpayer, or to an associate of the taxpayer, of:

(A) one or more fresh Crown leases of the land; or

(B) an estate in fee simple in the land;

the taxpayer had disposed of the property to the lessor, and the lessor had acquired the property from the taxpayer, for:

(iii) if the taxpayer receives, or is entitled to receive, consideration in respect of the expiry or surrender - a consideration equal to so much of the consideration received or receivable by the taxpayer as is attributable to the property; or

(iv) in any other case - no consideration; and

(d) if:

(i) the Crown lease expires or is surrendered; and

(ii) the expiry or surrender is followed by the grant to an associate of the taxpayer of:

(A) one or more fresh Crown leases of the land; or

(B) an estate in fee simple in the land;

the taxpayer had disposed of the property to the lessor, and the lessor had acquired the property from the taxpayer, for a consideration equal to the amount that would have been the market value of the property immediately before the expiry or surrender if the taxpayer had held an estate in fee simple in the land instead of the Crown lease; and

(e) if:

(i) the lessor terminates the Crown lease; and

(ii) the termination is not followed by the grant to the taxpayer, or to an associate of the taxpayer, of:

(A) one or more fresh Crown leases of the land; or

(B) an estate in fee simple in the land;

the taxpayer had disposed of the property to the lessor, and the lessor had acquired the property from the taxpayer, for:

(iii) if the taxpayer receives, or is entitled to receive, consideration in respect of the termination - a consideration equal to so much of the consideration received or receivable by the taxpayer as is attributable to the property; or

(iv) in any other case - no consideration; and

(f) if:

(i) the lessor terminates the Crown lease; and

(ii) the termination is followed by the grant to an associate of the taxpayer of:

(A) one or more fresh Crown leases of the land; or

(B) an estate in fee simple in the land;

the taxpayer had disposed of the property to the lessor, and the lessor had acquired the property from the taxpayer, for a consideration equal to the amount that would have been the market value of the property immediately before the termination if the taxpayer had held an estate in fee simple in the land instead of the Crown lease; and

(g) if the taxpayer disposes of the Crown lease to another person - the taxpayer had disposed of the property to the other person for a consideration equal to so much of the consideration paid or given by the other person for the acquisition of the Crown lease as is attributable to the property.

54AA(3)   Modification of market value.  

In working out the following amounts in relation to the property:

(a) the value mentioned in paragraph 59(3)(d) ;

(b) the market value mentioned in subsection 59(4) ;

(c) the market value mentioned in subsection 59AA(2) ;

it is to be assumed that the taxpayer had held an estate in fee simple in the land instead of the Crown lease.

54AA(4)   Modification of section 51AD and Division 16D.  

Section 51AD , and Division 16D , to the extent to which that section and that Division relate to depreciation, apply as if the taxpayer were the owner of the property instead of any other person.

54AA(5)   Expiry or surrender of certain leases to be ignored.  

For the purposes of the application of this section to a unit of property affixed to land, if:

(a) a taxpayer is the lessee of the land under a Crown lease; and

(b) the Crown lease expires or is surrendered or terminated; and

(c) one or more fresh Crown leases of the land are granted to the taxpayer;

the Crown lease or leases mentioned in paragraph (c) are taken to be a continuation of the Crown lease mentioned in paragraph (b).

54AA(6)   Extended meaning of ``associate'' - government authorities.  

For the purposes of this section, but without limiting the meaning of the expression ``associate'':

(a) the Commonwealth is taken to be an associate of each authority of the Commonwealth; and

(b) an authority of the Commonwealth is taken to be an associate of each other authority of the Commonwealth; and

(c) a State is taken to be an associate of each authority of the State; and

(d) an authority of a State is taken to be an associate of each other authority of the State; and

(e) a Territory is taken to be an associate of each authority of the Territory; and

(f) an authority of a Territory is taken to be an associate of each other authority of the Territory.

54AA(7)   Extended meaning of ``associate'' - former partnerships.  

For the purposes of this section, the definition of ``associate'' in section 26AAB has effect as if:

(a) subparagraph (a)(ii) of that definition were omitted and the following subparagraph were substituted:

``(ii) a partner of the taxpayer or a partnership in which the taxpayer is or was a partner (whether or not the partnership still exists);''; and

(b) subparagraph (b)(i) of that definition were omitted and the following subparagraph were substituted:

``(i) a partner of the taxpayer or a partnership in which the taxpayer is or was a partner (whether or not the partnership still exists);''.

54AA(7A)   Meaning of ``eligible government body''.  

For the purposes of this section, a person is an eligible government body at a particular time if:

(a) the person is the Commonwealth, a State or a Territory; or

(b) both:

(i) the person is an authority of the Commonwealth, a State or a Territory; and

(ii) assuming that the authority had derived income at that time, that income would be exempt from tax because the authority is an exempt entity.

(c) the person is the government of, or of a part of, a foreign country; or

(d) both:

(i) the person is an authority of the government of a foreign country or an authority of the government of a part of a foreign country; and

(ii) the authority is of a similar nature to an authority covered by paragraph (b).

54AA(8)   Definitions.  

In this section:

"associate"
has the same meaning as in section 26AAB ;

"Crown lease"
means:

(a) a lease of land granted by an eligible government body; or

(b) an easement in connection with land, where the easement was granted by an eligible government body; or

(c) any other right, power or privilege over, or in connection with, land, where the right, power or privilege was granted by an eligible government body;

"effective life"
has the same meaning as in section 54A ;

"eligible government body"
has the meaning given by subsection (7A);

"lessee"
, in relation to a Crown lease, means the holder of the Crown lease;

"lessor"
, in relation to a Crown lease, means:

(a) the eligible government body which granted the Crown lease; or

(b) if the interests of the grantor in relation to the Crown lease are held by another person - that other person;

"scheme"
includes:

(a) any agreement, arrangement, understanding, promise or undertaking:

(i) whether expressed or implied; or

(ii) whether or not enforceable, or intended to be enforceable, by legal proceedings; and

(b) any scheme, plan, proposal, action, course of action or course of conduct, whether unilateral or otherwise.