INCOME TAX ASSESSMENT ACT 1936 (ARCHIVE)

PART XII - DROUGHT INVESTMENT ALLOWANCE  

Division 3 - Leasing company deduction  

Subdivision C - Transfer of entitlement to deduction  

SECTION 649   LOSS OF LESSEE ENTITLEMENT  

649(1)   [Application]  

Subject to subsection (3), the lessee is not entitled to the deduction if subsection (2) applies and, 12 months or more after the item is first used, or installed ready for use, by the lessee but before the end of the term of the lease:

(a) the lessee uses the item outside Australia or for a purpose other than that of producing assessable primary production income; or

(b) the lease is terminated other than because:

(i) its term ended; or

(ii) the lessee acquired the item; or

(c) while the lease is in force, the lessee enters into a contract or arrangement with another person for the use of the item by the other person; or

(d) the lessee acquires the item and disposes of it; or

(e) the lessee acquires the item and enters into a contract or arrangement with another person for the use of the item by the other person.

649(2)   Additional requirement for loss.  

For the lessee to be not entitled, it is also necessary that, when the lessee took the item on lease, the lessee intended:

(a) to do the thing mentioned in paragraph (1)(a), (c), (d) or (e); or

(b) to cause the lease to be terminated as mentioned in paragraph (1)(b);

as the case requires.

649(3)   Commissioner may determine that entitlement not wholly lost.  

If the Commissioner determines that the lessee should not lose the entitlement to the whole or the part of the deduction, this section does not apply to the whole or the part.

Note:

If the lessee does lose the entitlement under this section, this does not mean that the taxpayer who transferred it regains it.