Income Tax Assessment Act 1997



Division 242 - Leases of luxury cars  

Subdivision 242-A - Notional sale and loan  

Operative provisions

SECTION 242-15   Notional sale and acquisition  

This Act has effect as if:

(a) the *car had been disposed of (the notional sale ) by the lessor to the lessee; and

(b) the car had been acquired by the lessee;

at the start of the term of the lease.


This Act will apply as it would have if the lessor had actually disposed of the car to the lessee. For example, if the lessor had been deducting an amount for the car ' s decline in value, the notional disposal will activate the balancing adjustment rules in Subdivision 40-D because the lessor would be treated as no longer holding the car.

This Act also has effect as if the lessee owns the *car until:

(a) the lease (not including any extension or renewal of the lease) ends; or

(b) the lessee enters into a sublease of the car and this Division applies to the car in relation to the sublease.

Note 1:

This means that the lessee (and not the lessor) may be able to deduct amounts for the decline in value of the car under Division 40 .

Note 2:

The lessee will be treated as continuing to own the car until the end of any extension or renewal: see section 242-80 .


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