Income Tax Assessment Act 1997

CHAPTER 3 - SPECIALIST LIABILITY RULES  

PART 3-10 - FINANCIAL TRANSACTIONS  

Division 242 - Leases of luxury cars  

Subdivision 242-B - Amount to be included in lessor ' s assessable income  

Operative provisions

SECTION 242-35   Amount to be included in lessor ' s assessable income  

Accrual amounts

242-35(1)    
The lessor ' s assessable income for an income year includes:

(a) if a *luxury car lease payment period for the lease of a *car occurs wholly during 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.

242-35(2)    
The amount is:

Outstanding notional loan principal at the start of the lease payment period

×

Implicit interest rate

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

242-35(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.