INCOME TAX ASSESSMENT ACT 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-10 - FINANCIAL TRANSACTIONS  

Division 242 - Leases of luxury cars  

Subdivision 242-E - Extension, renewal and final ending of the lease  

Guide to Subdivision 242-E

SECTION 242-75   What this Subdivision is about  


When a luxury car lease ends (whether it expires or is terminated before its expiry date), one of 3 things will happen:

  • (a) if the lease is extended or renewed - the original notional loan is treated as having been repaid and the lessor is treated as having made a new loan to the lessee; or
  • (b) if the lessee acquires the car from the lessor - the lessee continues to own the car for tax purposes, and the actual transfer and the termination payment to acquire the car are ignored for tax purposes; or
  • (c) if the lessee ' s right to use the car ends - the lessee is treated as having sold the car back to the lessor.
  • In each case, there may be adjustments under Subdivision 242-D to ensure that the right amount has been taxed over the term of the lease.


    TABLE OF SECTIONS
    TABLE OF SECTIONS
    Operative provisions
    242-80 What happens if the term of the lease is extended or the lease is renewed
    242-85 What happens if an amount is paid by the lessee to acquire the car
    242-90 What happens if the lessee stops having the right to use the car


    View surrounding sectionsView surrounding sectionsBack to top


    This information is provided by CCH Australia Limited Link opens in new window. View the disclaimer and notice of copyright.