INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART III - LIABILITY TO TAXATION  

Division 4 - Leases  

SECTION 85   DEDUCTIONS UPON DISPOSAL OF LEASE, GOODWILL OR LICENCE  

85(1)   [Allowable deduction]  

Where, in the year of income, a taxpayer assigns or surrenders a lease, any amount which has been paid by him -

(a) to acquire the lease;

(b) in effecting improvements upon land which is the subject of the lease; or

(c) to obtain the assent of the lessor to the assignment or surrender,

shall, subject to this section, be an allowable deduction.

85(2)   [Deduction of premium on sale]  

Where, in the year of income, a taxpayer disposes, by sale or otherwise, of goodwill or a licence in respect of a business carried on upon land a lease of which is granted, assigned or surrendered by him, any premium paid by him to acquire that goodwill or licence shall, subject to this section, be an allowable deduction.

85(3)   [Previous deductions]  

The deduction allowable under subsection (1) or (2) in respect of an amount shall be reduced by so much (if any) of that amount as has been allowed or is allowable as a deduction in assessments of the taxpayer (or, where subsection (4) applies, in assessments of the taxpayer or of another person) for income tax under another provision of this Act or under a previous law of the Commonwealth.

85(4)   [Succession to lease, etc]  

Where a taxpayer, upon the death of another person, succeeds to property being a lease, goodwill or licence, any amount which was paid by the deceased person in respect of the property shall be deemed, for the purposes of this section, to have been paid by the taxpayer.

85(5)   [Where premium assessable]  

Where, in relation to the assignment or surrender of a lease or the disposal of goodwill or a licence, a premium is included in the assessable income of the taxpayer of the year of income, any deduction allowable under this section in relation to that assignment, surrender or disposal shall, for the purposes of this Act, be deemed to relate directly to that premium.

85(6)   [Premiums payable in more than one year]  

Where, in relation to the assignment or surrender of a lease or the disposal of goodwill or a licence, premiums are payable to the taxpayer in 2 or more years of income, subsection (1) or (2) does not apply, but the amount which bears the same proportion to the amount which, but for this subsection, would be allowable as a deduction under either of those subsections in the year of income in which the assignment, surrender or disposal takes place as the premium payable in the year of income bears to the total of those premiums shall be an allowable deduction.

85(7)