Section DB 22 — Income Tax Act 2007: Amounts paid for non-compliance and change in use

DB 22 Amounts paid for non-compliance and change in use When this section applies (1) This section applies when— (a) a person who is a lessor receives an amount for non-compliance with a covenant for repair that is assessable income under section CC 2 (Non-compliance with covenant for repair); and (b) in the income year in which the lessor receives the amount or in any of the following 4 income years,— (i) the lessor does not use the land to which the amount relates to derive assessable income, but continues to own the land; and (ii) the lessor incurs expenditure in maintaining the land or in making repairs to improvements on the land, including painting and general maintenance; and (iii) the lessor would have been allowed a deduction if the land had been used for the purpose of deriving assessable income; and (iv) in the absence of section DB 46 , no other provision of this Act would allow the lessor a deduction for the expenditure. Deduction (2) The lessor is allowed a deduction for the expenditure. Amount of deduction (3) The amount of the deduction is the lesser of— (a) the amount of the expenditure; and (b) the part of the amount that is assessable income derived by the lessor in the income year in which the expenditure is incurred through the operation of— (i) section CC 2 ; or (ii) section EI 5 (Amount paid to lessor for non-compliance with covenant for repair); or (iii) section EI 6 (Amount paid for non-compliance: when lessor ceases to own land). Link with subpart DA (4) This section supplements the general permission. The general limitations still apply. Defined in this Act: amount , assessable income , deduction , general limitation , general permission , income year , own , supplement , Compare: 2004 No 35 s DB 16