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CH 5: Adjustment for GST
or “How GST adjustments affect your income tax”
You could also call this:

“How to adjust your income when certain leases change”

When certain types of leases change, you might need to make adjustments to your income. This happens when a lease becomes a finance lease or for some operating leases.

If you’re a lessor (someone who owns property and rents it out) or a lessee (someone who rents property from someone else), and your lease becomes a finance lease, you might have to add some money to your income. This extra money is called a positive adjustment. You need to include this in your income for the year when the lease changes to a finance lease.

For some operating leases, if you’re a lessor, you might also need to add some money to your income. This happens in the year after 20 June 2007.

These rules come from section FA 11 and FA 11B of the law, which explain how to make these adjustments.

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Next up: CH 7: Adjustment for avoidance arrangements

or “Adjusting income for tax avoidance and other specific situations”
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Part C Income
Adjustments

CH 6Adjustments for certain finance and operating leases

  1. This section applies when an adjustment is made under section FA 11 or FA 11B (which relate to adjustments for leases that become finance leases and certain operating leases).

  2. The amount of a positive adjustment under section FA 11 is income of the lessor or the lessee, as applicable, in the income year in which the lease becomes a finance lease.

  3. The amount of the adjustment under section FA 11B is income of the lessor in the income year after the income year in which 20 June 2007 falls.

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Notes
  • Section CH 6: substituted, on , by section 321 of the Taxation (Business Taxation and Remedial Matters) Act 2007 (2007 No 109).