Document ID: chunk:federal_register_of_legislation:C2011C00610:clause:3_2:p5
Version: federal_register_of_legislation:C2011C00610
Segment Type: clause
Provision Reference: sch 3 cl 2 (pt 5/9)
Character Range: 144256–147029

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 the notional loan to the same extent that the lessee would have been able to deduct the lease payments apart from this Division.

Table of sections

Operative provisions

242‑50 Extent to which deductions are allowable to lessee
242‑55 Lease payments not deductible

Operative provisions

242‑50  Extent to which deductions are allowable to lessee

 (1) If a *luxury car lease payment period for the lease of a *car occurs wholly during an income year of the lessee, the lessee can deduct the accrual amount for that period for that income year.

Note 1: If a luxury car lease payment period would otherwise be longer than 6 months, subsection 242‑35(3) divides the original period into periods of no longer than 6 months.

Note 2: For accrual amount, see subsection 242‑35(1).

 (2) If part of a *luxury car lease payment period for the lease of a *car occurs during an income year of the lessee, the lessee can deduct so much of the accrual amount for that period as may appropriately be related to that income year in accordance with generally accepted accounting principles.

 (3) The lessee can deduct an accrual amount, or part of an accrual amount, for a *luxury car lease payment period under subsection (1) or (2) for an income year only to the extent that the lessee could deduct the luxury car lease payments made for that year apart from this Division.

242‑55  Lease payments not deductible

  The lessee cannot deduct the *luxury car lease payments that the lessee makes under the lease for any income year.

Note: Those payments are instead taken into account in calculating accrual amounts that are deductible under section 242‑50.

Subdivision 242‑D—Adjustments if total amount assessed to lessor differs from amount of interest

Guide to Subdivision 242‑D

242‑60  What this Subdivision is about

      When a luxury car lease is extended, renewed or ends, the overall nominal gain to the lessor is compared to the nominal interest so far paid under the lease.
      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)