Document ID: chunk:federal_register_of_legislation:C2011C00610:clause:3_2:p4
Version: federal_register_of_legislation:C2011C00610
Segment Type: clause
Provision Reference: sch 3 cl 2 (pt 4/9)
Character Range: 141800–144518

that income year—the amount (an accrual amount) worked out under subsection (2) for that luxury car lease payment period; and
 (b) if part of a luxury car lease payment period for the lease of a car occurs during that income year—so much of the amount (also an accrual amount) worked out under subsection (2) for that luxury car lease payment period as may appropriately be related to that income year in accordance with generally accepted accounting principles.

 (2) The amount is:
where:

implicit interest rate is the implicit interest rate under the lease for the *luxury car lease payment period, taking into account the payments to be made by the lessee under the lease and any *termination amounts.

outstanding notional loan principal at the start of the lease payment period is:
 (a) the sum of the notional loan principal and the accrual amounts for earlier *luxury car lease payment periods; less
 (b) the sum of the *luxury car lease payments that the lessee was required to make before the start of the relevant luxury car lease payment period.

Excessive periods

 (3) If, apart from this subsection, a *luxury car lease payment period for the lease of a *car would exceed 6 months, this Division applies as if each of the following were a separate luxury car lease payment period:
 (a) the first 6 months of the original luxury car lease payment period;
 (b) if the original luxury car lease payment period was not longer than 12 months—the remaining part of the original luxury car lease payment period;
 (c) if the original luxury car lease payment period was longer than 12 months—each successive 6 month period in the original luxury car lease payment period;
 (d) the period (if any) after the end of the last of the periods to which paragraph (c) applies.

242‑40  Treatment of lease payments

 (1) The *luxury car lease payments under the lease are not assessable income and are not *exempt income of the lessor.

Note: Those lease payments are instead taken into account in calculating accrual amounts that are included in the lessor's assessable income under section 242‑35.

 (2) In working out the amounts the lessor can deduct for any income year, ignore the fact that subsection (1) makes the *luxury car lease payments *non‑assessable non‑exempt income.

Note: This allows the lessor to continue to deduct amounts related to earning the lease payments (such as interest on an amount the lessor borrowed to acquire the car), just as if the amounts related to earning interest on the notional loan to the lessee.

Subdivision 242‑C—Deductions allowable to lessee

Guide to Subdivision 242‑C

242‑45  What this Subdivision is about

      The lessee is entitled to deduct the interest on