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Draft Taxation Determination

TD 93/D157

Income tax: is a lease acceptable if it is based on a $1 residual value?

  • Please note that the PDF version is the authorised version of this draft ruling.
    This document has been finalised by TD 94/20.

FOI status:

draft only - for comment

Preamble

Draft Taxation Determinations (TDs) present the preliminary, though considered, views of the ATO. Draft TDs may not be relied on; only final TDs are authoritative statements of the ATO.

1. No. The residual value of a leased item should either conform with the table of minimum residual values set out in IT 28 or a well considered estimate of the market value of the leased item at the end of the lease.

2. A $1 residual value would only conform to this test if the market value of the asset was $1, indicating that the term of the lease was the effective life of the asset. A lease for the substantial life of an asset is not accepted as a genuine lease (see IT 2594).

Commissioner of Taxation
17/6/93

References


BO NO 93/195-1

ISSN 1038 - 8982

Related Rulings/Determinations:

IT 28

Subject References:
leasing
residual values


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