Income Tax Assessment Act 1997

CHAPTER 2 - LIABILITY RULES OF GENERAL APPLICATION  

PART 2-1 - ASSESSABLE INCOME  

Division 20 - Amounts included to reverse the effect of past deductions  

Subdivision 20-B - Disposal of a car for which lease payments have been deducted  

The usual case

SECTION 20-110   Disposal of a leased car for profit  

20-110(1)  
Your assessable income includes the * profit you make on disposing of a * car if:


(a) the car was designed mainly for carrying passengers; and


(b) the car was leased to you and has been leased to no-one else; and


(c) you or another entity can deduct for the income year any of the lease payments paid or payable by you, or have deducted or can deduct any of them for an earlier income year, under this Act; and


(d) you acquired the car from the lessor.

Note 1:

Even if subsection (1) does not apply, an amount may still be included in your assessable income:

  • · under section 20-125 (which deals with more complicated cases that may involve your associate); or
  • · if you disposed of an interest in a car (rather than the car itself): see section 20-160 .
  • Note 2:

    In some cases you do not include an amount in your assessable income:

  • · if there has been an earlier disposal of the car for market value: see section 20-135 ; or
  • · if you inherited the car: see section 20-145 ; or
  • · if the car was let on hire in the circumstances set out in section 20-155 .
  • 20-110(2)  
    However, the amount included cannot exceed the smaller of these limits:


    (a) the total lease payments for the lease that you or another entity have deducted or can deduct under this Act for an income year;


    (b) the amount of * notional depreciation for the lease period.

    Note 1:

    If, because of more than one lease of the car, there is more than one way to work out the amount to be included, you only include the largest amount: see section 20-130 .

    Note 2:

    In some cases you reduce the amount to be included:

  • · if there has been an earlier disposal of the car, or of an interest in it: see section 20-140 ; or
  • · if another provision requires you to include an amount because of the disposal: see section 20-150 .
  • 20-110(3)  
    You increase those limits if you have previously leased the * car from the same lessor, or from an * associate of that lessor.

    You increase the first limit by the total lease payments for each previous lease of that kind that you or another entity have deducted or can deduct under this Act for an income year.

    You increase the second limit by the amount of * notional depreciation for the period of each previous lease of that kind.


     

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