Income Tax Assessment Act 1997



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.

    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


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