Section GC 5 — Income Tax Act 2007: Leases for inadequate rent

GC 5 Leases for inadequate rent When this section applies (1) This section applies in relation to leases of real and personal property if and to the extent to which— (a) a property is leased; and (b) the lease is 1 of the types referred to in subsection (2); and (c) the lessee uses the property in deriving income; and (d) no rent is payable, or the Commissioner considers that the rent is less than adequate. Types of leases (2) The following types of leases are subject to this section: (a) a lease by a company: (b) a lease by a person to a relative or a related company: (c) a lease by 2 or more persons to a relative or a related company of any of those persons: (d) a lease by a partnership to a relative of a partner or a related company of the partnership. Lease treated as having adequate rent (3) The lessee is treated as paying, and the lessor is treated as deriving as income, an adequate rent determined by the Commissioner. Timing (4) The adequate rent is treated as— (a) paid on the rent payment dates set out in the lease, if any; and (b) paid on a daily basis on each day of the lease term, if there are no rent payment dates; and (c) income derived by the lessor on the date on which it is treated as being paid; and (d) accruing on a daily basis. Some definitions (5) In this section,— lease means a tenancy of any duration, including a sublease or bailment related company means a company that is associated with— (a) in the case of a single lessor, the lessor, 1 or more relatives of the lessor, or a combination of them: (b) 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. Defined in this Act: Commissioner , company , income , lease , related company , relative , rent , Compare: 2004 No 35 s GD 10 Section GC 5(1): amended (with effect on 1 April 2008), on 29 August 2011 (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(5) related company : amended, on 1 April 2010 (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).