Document ID: chunk:federal_register_of_legislation:C2025C00029:section:1:p15
Version: federal_register_of_legislation:C2025C00029
Segment Type: section
Provision Reference: s 1 (pt 15/35)
Character Range: 4096945–4099586

If the overall nominal gain is greater, the difference is assessable income of the lessor, and the lessee may be able to deduct it.
      If the overall nominal gain is less, the lessor can deduct the difference, which may also be assessable income of the lessee.
      This process ensures that the right amount has been taxed over the term of the lease.

Table of sections

Operative provisions
242‑65 Adjustments for lessor
242‑70 Adjustments for lessee

Operative provisions

242‑65  Adjustments for lessor
 (1) This section applies at the following times:
 (a) if the term of the lease is extended—when the extension takes effect;
 (b) if the lease is renewed—when the renewal takes effect;
 (c) when the lease (including any extension or renewal of the lease) ends.
 (2) If the sum of all amounts (whether *luxury car lease payments, a *termination amount or any other payments) that were paid or payable to the lessor under the lease exceeds the amount worked out under subsection (4), the excess is included in the lessor's assessable income for the income year in which the relevant time occurs.
Note: Subsection 242‑80(8) treats the amount of a notional loan that is taken to be made by an extended or renewed lease to be a termination amount paid under the previous lease.
 (3) If the sum of all amounts (whether *luxury car lease payments, a *termination amount or any other payments) that were paid or payable to the lessor under the lease is less than the amount worked out under subsection (4), the lessor can deduct the difference for the income year in which the relevant time occurs.
 (4) The amount for the purposes of subsections (2) and (3) is the sum of:
 (a) the notional loan principal; and
 (b) the sum of the accrual amounts that have been or are to be included in the lessor's assessable income of any income year.
Note: For accrual amount, see subsection 242‑35(1).

242‑70  Adjustments for lessee
 (1) If:
 (a) an amount is included in the lessor's assessable income for an income year under subsection 242‑65(2); or
 (b) an amount would have been so included if the lessor had been subject to tax on assessable income;
the lessee can deduct a corresponding amount for the same income year.
 (2) If:
 (a) the lessor can deduct an amount for an income year under subsection 242‑65(3); or
 (b) the lessor could have deducted an amount under that subsection if the lessor had been subject to tax on assessable income;
a corresponding amount is included in the lessee's assessable income for the same income year.
 (3) The lessee cannot deduct an amount for any income year under subsection (1), and an amount is not