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Edited version of private advice
Authorisation Number: 1052406976710
Date of advice: 24 June 2025
Ruling
Subject: Lease surrender payments
Question 1
Are the payments made by Company A considered deductible under section 8-1 of the Income Tax Assessment Act 1997 (ITAA 1997)?
Answer 1
No
Question 2
Are the payments made by Company A deductible under section 25-15 of the ITAA 1997?
Answer 2
No
Question 3
Where the Commissioner's answer to (1) and (2) are both no in relation to the payments made by Company A, are those payments deductible under section 25-110 of the ITAA 1997?
Answer 3
Yes
This ruling applies for the following periods:
Year ended 30 June 20XX
Year ended 30 June 20XX
Year ended 30 June 20XX
Year ended 30 June 20XX
Year ended 30 June 20XX
Relevant facts and circumstances
Company A made payments in respect of a lease it held.
Relevant legislative provisions
Income Tax Assessment Act 1997 section 8-1
Income Tax Assessment Act 1997 section 25-15
Income Tax Assessment Act 1997 section 25-110
Does IVA apply to this private ruling?
No
Reasons for decision
Company A is not entitled to claim a deduction for payments under section 8-1 of ITAA 1997 because the payments are of a capital nature.
Company A is not entitled to claim a deduction for the payments under section 25-15 because the payments have not been made because of a failure to comply with a lease obligation.
Company A is entitled to a deduction for the payments under section 25-110 because the capital expenditure resulted in the termination of a lease incurred in the carrying on of a business.