Section 681AJ — Income Tax Act 2007: Commercial rent: comparison with rent under a lease

Commercial rent: comparison with rent under a lease 681AJ 1 Subsection (3) applies—

a for the purpose of making a comparison under rule 4 of section 681AD(3) if section 681AD has effect because of section 681AA(1),

and b for the purpose of making a comparison under section 681AE(3) if section 681AE has effect because of section 681AA(2).

2 In this section “ the actual lease ” means the lease mentioned in section 681AA(1)(b) or (2)(b).

3 The commercial rent is the rent which might be expected to be paid under a lease, of the land in respect of which the payment mentioned in section 681AA(1)(b) or (2)(b) is made, which—

a was negotiated in the open market when the actual lease was created, b is of the same duration as the actual lease, c is subject to the terms and conditions of the actual lease as respects liability for maintenance and repairs, and d provides for rent payable at uniform intervals and at an appropriate rate.

4 Rent is payable at an appropriate rate if—

a it is payable at a uniform rate, or b in a case where the rent payable under the actual lease is rent at a progressive rate (and such that the amount of rent payable for a year is never less than the amount payable for a previous year), it progresses by gradations proportionate to those provided by the actual lease.