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Income Tax Act 2007

Income - Terminating provisions

CZ 20: Disposal of personal property lease asset under specified lease

You could also call this:

“Rules for selling or re-leasing property after a special lease ends”

When you lease a personal property item under a special kind of lease called a specified lease, there are rules about what happens when that item is sold, given to someone else, or leased again after the original lease ends.

If the person who owns the item (the lessor) makes more money from selling or leasing the item than they expected, they have to count that extra money as income. They do this in the year when the lease ends or is stopped early.

If you’re the person using the leased item (the lessee) and you sell it for more than expected, you also have to count that extra money as income. You do this in the year when you sell the item.

These rules are part of a bigger set of rules in section FZ 2 that talk about how specified leases affect both the person who owns the item and the person who uses it.

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View the original legislation for this page at https://legislation.govt.nz/act/public/1986/0120/latest/link.aspx?id=DLM1513547.

Topics:
Money and consumer rights > Taxes
Housing and property > Renting
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Part C Income
Terminating provisions

CZ 20Disposal of personal property lease asset under specified lease

  1. This section applies for the purposes of section FZ 2 (Effect of specified lease on lessor and lessee) when a personal property lease asset that is leased under a specified lease is sold, assigned or leased on or after the term of the lease.

  2. The amount of the excess described in section FZ 2(5)(c) is treated as income derived by the lessor in the income year in which the lease is terminated.

  3. The amount of the excess described in section FZ 2(7) is treated as income derived by the lessor in the income year in which the term of the lease ends.

  4. The amount of the excess described in section FZ 2(8) is income of the lessee in the income year in which the asset is disposed of.

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