Section FB 19 — Income Tax Act 2007: Leased assets

FB 19 Leased assets When this section applies (1) This section applies when— (a) a person leases, rents, or hires plant, machinery, or other equipment, including a motor vehicle or a temporary building; and (b) they are allowed a deduction in an income year for an amount paid under the agreement to lease, rent, or hire; and (c) they acquire the lease asset at any time, or a person associated with them acquires the asset; and (d) either they, or the associated person, transfer the asset on a settlement of relationship property. Income when transferee disposes of asset (2) If the transferee disposes of the asset for an amount that is more than the transfer amount, they are treated as deriving income as described in section FA 5 (Assets acquired and disposed of after deduction of payments under lease) in the income year of the disposal of the asset equal to the lesser of— (a) the amount by which the amount derived on disposal is more than the transfer amount; or (b) the sum of the amounts for which the transferor has been allowed a deduction. Transfer amount (3) In this section, the transfer amount is the amount that equals, as applicable,— (a) the adjusted tax value of the asset at the start of the year of transfer; or (b) if the asset was acquired by the transferor or the associated person during the year of transfer, the base value of the asset. Defined in this Act: adjusted tax value , amount , associated person , deduction , income , income year , lease , pay , settlement of relationship property , temporary building , transfer amount , year of transfer , Compare: 2004 No 35 s FF 14