Section CG 7 — Income Tax Act 2007: Recoveries after deduction of payments under lease

CG 7 Recoveries after deduction of payments under lease When this section applies (1) This section applies, for the purposes of section FA 5 (Assets acquired and disposed of after deduction of payments under lease) when— (a) a person leases, rents, or hires an asset that is— (i) plant, machinery, or other equipment; or (ii) a motor vehicle; or (iii) a temporary building; and (b) they are allowed a deduction for the rental payments; and (c) they acquire the asset and later dispose of it for an amount that is more than the amount paid to acquire the asset. Income (2) The amount described in subsection (3) is income of the person. Consideration less payments or total deductions (3) The amount is the lesser of the amount by which the consideration on disposal is more than— (a) the sum of the payments made; or (b) the total amount of the deductions referred to in subsection (1)(b). Timing of income (4) The income is allocated to the income year of the disposal of the asset. Defined in this Act: amount , deduction , dispose , income , income year , motor vehicle , pay , temporary building Compare: 2004 No 35 s FC 5(1)