Document ID: chunk:federal_register_of_legislation:C2011C00610:clause:3_2:p2
Version: federal_register_of_legislation:C2011C00610
Segment Type: clause
Provision Reference: sch 3 cl 2 (pt 2/9)
Character Range: 137086–139555

to withholding tax under Division 11A.

 (3) For the purposes of paragraph (1)(a), the question whether an agreement is a *short‑term hire agreement is determined on the basis that an employee or employer of an entity is an *associate of the entity.

Note: Under the definition of short‑term hire agreement in subsection 995‑1(1), successive agreements for the hire of the same asset to an entity or its associates are not short‑term hire agreements if they result in substantial continuity of hiring.

242‑15  Notional sale and acquisition

 (1) 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.

Note: 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.

 (2) 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.

242‑20  Consideration for notional sale, and cost, of car

 (1) The consideration for the notional sale by the lessor, and the first element of the *cost of the *car for the lessee, are the car's *market value at the start of the term of the lease.

 (2) If:
 (a) the lease is a sublease; and
 (b) the lessee is one or more of the following:
 (i) an *associate of the lessor;
 (ii) an employer of the lessor;
 (iii) an employee of the lessor;
the first element of the *cost of the *car to the lessee is the sum of:
 (c) the amount that would have been the car's *adjustable value at the start of the term of the lease for the purposes of applying this Act to the lessor if the lessor were not taken under this Division to have disposed of the car; and
 (d) any amount that is included in the lessor's assessable income under section 40‑285