Part G
Avoidance and non-market transactions
Market value substituted
GC 5Leases for inadequate rent
This section applies in relation to leases of real and personal property if and to the extent to which—
- a property is leased; and
- the lease is 1 of the types referred to in subsection (2); and
- the lessee uses the property in deriving income; and
- no rent is payable, or the Commissioner considers that the rent is less than adequate.
This section does not apply when the property is an asset to which subpart DG (Expenditure related to use of certain assets) applies.
The following types of leases are subject to this section:
- a lease by a company:
- a lease by a person to a relative or a related company:
- a lease by 2 or more persons to a relative or a related company of any of those persons:
- a lease by a partnership to a relative of a partner or a related company of the partnership.
The lessee is treated as paying, and the lessor is treated as deriving as income, an adequate rent determined by the Commissioner.
The adequate rent is treated as—
- paid on the rent payment dates set out in the lease, if any; and
- paid on a daily basis on each day of the lease term, if there are no rent payment dates; and
- income derived by the lessor on the date on which it is treated as being paid; and
- accruing on a daily basis.
In this section,—
lease means a tenancy of any duration, including a sublease or bailment
related company means a company that is associated with—
- in the case of a single lessor, the lessor, 1 or more relatives of the lessor, or a combination of them:
- in the case of multiple lessors, including a partnership, any of the lessors, 1 or more relatives of any of the lessors, or a combination of them
rent includes a premium or other consideration for the lease.
- in the case of a single lessor, the lessor, 1 or more relatives of the lessor, or a combination of them:
Compare
- 2004 No 35 s GD 10
Notes
- Section GC 5(1): amended (with effect on 1 April 2008), on (applying for the 2008–09 and later income years), by section 48(1) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).
- Section GC 5(1B) heading: inserted (with effect on 1 April 2013 and applying for the 2013–14 and later income years for an item of property referred to in section DG 3(2)(a)(i), and for the 2014–15 and later income years for an item of property referred to in section DG 3(2)(a)(ii) and (iii)), on , by section 59(1) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
- Section GC 5(1B): inserted (with effect on 1 April 2013 and applying for the 2013–14 and later income years for an item of property referred to in section DG 3(2)(a)(i), and for the 2014–15 and later income years for an item of property referred to in section DG 3(2)(a)(ii) and (iii)), on , by section 59(1) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).
- Section GC 5(5) related company: amended, on (applying for the 2010–11 and later income years), by section 245(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
- Section GC 5 list of defined terms asset: inserted (with effect on 1 April 2013), on , by section 59(2) of the Taxation (Livestock Valuation, Assets Expenditure, and Remedial Matters) Act 2013 (2013 No 52).