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INCOME TAX ASSESSMENT AMENDMENT ACT (NO. 2) 1980 No. 57 of 1980 - SECT 4

4. After section 26AAA of the Principal Act the following section is inserted:
Assessable income from sale of leased motor vehicle

"26AAB. (1) This section applies to a unit of property being a motor vehicle
(including a vehicle known as a four wheel drive vehicle) that is a motor car
or station wagon where-

   (a)  the unit of property has been leased under an agreement (in this
        section referred to as the 'relevant lease agreement');

   (b)  all or any of the charges paid or payable by the lessee under the
        relevant lease agreement have been allowed or are allowable in whole
        or in part as a deduction or deductions from the assessable income of
        the lessee or of any other person of any year of income;

   (c)  on or after 22 August 1979, and whether during or after the period of
        the relevant lease agreement, the lessor disposed of the unit of
        property to the lessee, to an associate of the lessee or to persons
        including the lessee or an associate of the lessee otherwise than
        under a contract between the lessor and the lessee, the lessor and the
        associate or the lessor and those persons, as the case may be, that
        was entered into before that date; and

   (d)  at any later time, a person (in this section referred to as a
        'relevant taxpayer'), being the lessee or an associate of the lessee,
        disposed of the unit of property or of an interest in the unit of
        property and the consideration receivable by the relevant taxpayer in
        respect of the disposal exceeded-

        (i)    in a case where the unit of property was disposed of-the cost
               of the unit of property to the relevant taxpayer; or

        (ii)   in a case where an interest in the unit of property was
               disposed of-the amount that, in the opinion of the
               Commissioner, was the cost of the interest to the relevant
               taxpayer.



"(2) Subject to this section, the amount of the excess referred to in
paragraph (d) of sub-section (1) in relation to the disposal by a relevant
taxpayer of a unit of property to which this section applies shall be included
in the assessable income of that relevant taxpayer of the year of income in
which the disposal occurred to the extent that that amount does not exceed the
lower or the lowest, as the case requires, of the amounts respectively
applicable in accordance with the following paragraphs:

   (a)  the amount of depreciation that is deemed in accordance with sub-
        section (6) to have been allowable to the lessee in respect of the
        unit of property in respect of the period of the relevant lease
        agreement;

   (b)  the amount, or the sum of the amounts, of the charges paid or payable
        under the relevant lease agreement that have been allowed or are
        allowable as a deduction or deductions in respect of the unit of
        property from the assessable income of the lessee or of any other
        person of any year of income;

   (c)  if the unit of property was disposed of by the lessor to 2 or more
        persons (whether or not the relevant taxpayer was one of those
        persons) or to a person other than the relevant taxpayer-the amount by
        which the consideration receivable by the relevant taxpayer in respect
        of the disposal of the unit of property by the relevant taxpayer
        exceeded-

        (i)    in a case to which sub-paragraph (ii) does not apply-the cost
               of the unit of property to the persons, or to the person, as
               the case may be, to whom the lessor disposed of the property;
               or

        (ii)   in a case where, after the property was disposed of by the
               lessor and before the disposal by the relevant taxpayer,
               expenditure (in this sub-paragraph referred to as the 'relevant
               capital expenditure') of a capital nature was incurred in
               respect of the property by any person, being expenditure that
               is not, by virtue of sub-section (17), deemed to be expenditure
               that is directly attributable to the acquisition of the
               property by the persons or the person, as the case may be, to
               whom the lessor disposed of the property-the cost of the unit
               of property to the persons or to the person, as the case may
               be, to whom the lessor disposed of the property increased by
               the amount of the relevant capital expenditure.



"(3) Subject to this section, so much (if any) as the Commissioner determines
of the amount of the excess referred to in paragraph (d) of sub-section (1) in
relation to the disposal by a relevant taxpayer of an interest in a unit of
property to which this section applies shall be included in the assessable
income of that relevant taxpayer of the year of income in which the disposal
occurred.



"(4) In making a determination for the purposes of sub-section (3) in relation
to a disposal of an interest in a unit of property, the Commissioner shall
have regard to the manner in which this section would operate in relation to
that disposal if it were a disposal of a unit of property.



"(5) Where, in relation to a unit of property to which this section applies-

   (a)  by reason of a disposal of the unit of property by a relevant
        taxpayer, an amount is required to be included in the assessable
        income of that relevant taxpayer of a year of income by the
        application of this section in relation to a relevant lease agreement;
        and

   (b)  by any application or applications of this section, in relation to
        that relevant lease agreement, in relation to a previous disposal or
        previous disposals of the unit of property or of an interest in the
        unit of property, an amount or amounts has or have been included, is
        or are required to be included, or would but for sub-section (9), (10)
        or (12) have been or be required to be included, in the assessable
        income of any relevant taxpayer of any year of income in accordance
        with sub- section (2) or (3), then, in determining the amount to be so
        included in the assessable income of the first-mentioned relevant
        taxpayer as mentioned in paragraph (a) of this sub-section, each of
        the amounts respectively applicable in accordance with paragraphs (a),
        (b) and (c) of sub-section (2) shall be reduced by an amount equal to
        the amount, or the sum of the amounts, referred to in paragraph (b) of
        this sub-section.



"(6) For the purposes of the operation of paragraph (a) of sub-section (2) in
relation to a disposal of a unit of property to which this section applies,
the depreciation that is deemed to have been allowable to the lessee in
respect of the unit of property in respect of the period of the relevant lease
agreement is an
AB amount calculated in accordance with the formula --, where-
C

A is the amount of depreciation that would have been allowed or allowable to
the lessee in respect of the unit of property under section 54 if-

   (a)  the cost of the unit of property to the lessee had been the amount
        that, for the purposes of the application of the provisions of this
        Act relating to depreciation, is the cost (ascertained without regard
        to sub-sections (2A) and (2D) of section 59) of the property to the
        lessor; and

   (b)  the lessee had been entitled to a deduction or deductions calculated
        in accordance with paragraph (b) of sub-section (1) of section 56 in
        respect of the whole of the period (in this sub- section referred to
        as the 'lessor's period of ownership') commencing on the day on which
        the lessor first used the property (whether for the purpose of
        producing assessable income or otherwise) and ending on the day on
        which the lessor disposed of the property;

B is the number of whole days in the period of the relevant lease agreement;

C is the number of whole days in the lessor's period of ownership.



"(7) Where, under section 59, an amount would be included in the assessable
income of the lessee if-

   (a)  the lessee were entitled to a deduction or deductions in respect of
        the unit of property as mentioned in sub-section (6);

   (b)  the cost of the property to the lessee had been the amount that, for
        the purposes of the application of the provisions of this Act relating
        to depreciation, is the cost (ascertained without regard to
        sub-sections (2A) and (2D) of section 59) of the property to the
        lessor;

   (c)  the lessee had disposed of the property at the time when the lessor
        disposed of the property and had not made a request under sub-section
        (2A) or (2D) of section 59 in respect of the disposal; and

   (d)  the lessee had, in respect of that disposal, received-

        (i)    where sub-section (3) of section 59 applies for the purpose of
               ascertaining the amount of the consideration receivable by the
               lessor in respect of the disposal of the property by the
               lessor- the amount ascertained in accordance with that
               sub-section;

        (ii)   where sub-section (4) of section 59 applies for the purpose of
               ascertaining the amount of the consideration receivable by the
               lessor in respect of the disposal of the property by the
               lessor- the amount that would be applicable under sub-paragraph
               (i) of this paragraph if that sub-paragraph were applicable in
               relation to the disposal of the property by the lessor;

        (iii)  where sub-sections (3) and (6) of section 59 apply for the
               purpose of ascertaining the amount of the consideration
               receivable by the lessor in respect of the disposal of the
               property by the lessor-the amount ascertained in accordance
               with those sub- sections; or

        (iv)   where sub-sections (4) and (6) of section 59 apply for the
               purpose of ascertaining the amount of the consideration
               receivable by the lessor in respect of the disposal of the
               property by the lessor-the amount that would be applicable
               under sub- paragraph (iii) of this paragraph if that
               sub-paragraph were applicable in relation to the disposal of
               the property by the lessor, the component A for the purposes of
               the formula in sub-section (6) shall be reduced by the amount
               that would have been so included in the assessable income of
               the lessee.



"(8) Where, under section 59, a deduction would have been allowable to the
lessee if-

   (a)  the lessee were entitled to a deduction or deductions in respect of
        the unit of property as mentioned in sub-section (6);

   (b)  the cost of the property to the lessee had been the amount that, for
        the purposes of the application of the provisions of this Act relating
        to depreciation, is the cost (ascertained without regard to
        sub-sections (2A) and (2D) of section 59) of the property to the
        lessor;

   (c)  the lessee had disposed of the property at the time when the lessor
        disposed of the property; and

   (d)  the lessee had, in respect of that disposal, received-

        (i)    where sub-section (3) of section 59 applies for the purpose of
               ascertaining the amount of the consideration receivable by the
               lessor in respect of the disposal of the property by the
               lessor- the amount ascertained in accordance with that
               sub-section;

        (ii)   where sub-section (4) of section 59 applies for the purpose of
               ascertaining the amount of the consideration receivable by the
               lessor in respect of the disposal of the property by the
               lessor- the amount that would be applicable under sub-paragraph
               (i) of this paragraph if that sub-paragraph were applicable in
               relation to the disposal of the property by the lessor;

        (iii)  where sub-sections (3) and (6) of section 59 apply for the
               purpose of ascertaining the amount of the consideration
               receivable by the lessor in respect of the disposal of the
               property by the lessor- the amount ascertained in accordance
               with those sub-sections; or

        (iv)   where sub-sections (4) and (6) of section 59 apply for the
               purpose of ascertaining the amount of the consideration
               receivable by the lessor in respect of the disposal of the
               property by the lessor- the amount that would be applicable
               under sub-paragraph (iii) of this paragraph if that
               sub-paragraph were applicable in relation to the disposal of
               the property by the lessor, the component A for the purposes of
               the formula in sub-section (6) shall be increased by the amount
               of the deduction that would have been so allowable to the
               lessee.



"(9) Any amount that, apart from this sub-section, would, by reason of the
disposal of a unit of property, or of an interest in a unit of property, by a
relevant taxpayer, be included in the assessable income of the relevant
taxpayer under this section shall be reduced by any amount that has been or
will be, or the sum of any amounts that have been or will be, included in the
assessable income of the relevant taxpayer of any year of income in respect of
that disposal in accordance with another provision of this Act other than
section 59.



"(10) Where-

   (a)  by reason of the operation of this section in relation to a relevant
        lease agreement, an amount would, apart from this sub-section and sub-
        section (9), be included in the assessable income of a relevant
        taxpayer in relation to the disposal of a unit of property, or of an
        interest in a unit of property, by the relevant taxpayer; and

   (b)  by reason of the operation of this section in relation to another
        relevant lease agreement or in relation to other relevant lease
        agreements, an amount is, or amounts are, also required to be included
        in the assessable income of the relevant taxpayer in relation to that
        disposal, the greater, or the greatest, as the case requires, of the
        amounts so required t o be included in that assessable income shall be
        included in that assessable income and the other amount, or the other
        amounts, as the case requires, shall not be included in that
        assessable income under this section.



"(11) Where-

   (a)  by reason of the operation of this section in relation to a relevant
        lease agreement, an amount would, apart from this sub-section and
        sub-sections (9) and (10), be included in the assessable income of a
        relevant taxpayer in relation to the disposal of a unit of property by
        the relevant taxpayer;

   (b)  after the property was disposed of by the lessor as mentioned in
        paragraph (c) of sub-section (1) and before the disposal by the
        relevant taxpayer, the property was disposed of by another person (in
        this sub-section referred to as the 'previous seller'), being the
        lessee or an associate of the lessee; and

   (c)  in relation to the disposal of the property by the previous seller,
        either of the following conditions is satisfied, namely:

        (i)    the consideration receivable in respect of the disposal by the
               previous seller was not less than the market value of the unit
               of property at the time of that disposal; or

        (ii)   an amount has been or will be included in the assessable income
               of the previous seller by reason of that disposal, being an
               amount that is, or is calculated by reference to, the value or
               market value of the unit of property at the time of that
               disposal, no amount shall be included in the assessable income
               of the relevant taxpayer under this section in relation to the
               disposal of the unit of property by the relevant taxpayer.



"(12) Where-

   (a)  apart from this sub-section and sub-sections (9), (10) and (11), an
        amount would be included in the assessable income of a relevant
        taxpayer under this section by reason of a disposal by the relevant
        tax- payer of a unit of property to which this section applies or of
        an interest in a unit of property to which this section applies; and

   (b)  the relevant taxpayer acquired the unit of property or the interest,
        as the case may be, under or by reason of-

        (i)    a will, a codicil or an order of a court that varied or
               modified the provisions of a will or a codicil; or

        (ii)   an intestacy or an order of a court that varied or modified the
               application, in relation to the estate of a deceased person, of
               the provisions of the law relating to the distribution of the
               estates of persons who die intestate, no amount shall be
               included in the assessable income of the relevant taxpayer
               under this section in relation to the disposal of the unit of
               property or of the interest in the unit of property by the
               relevant taxpayer.



"(13) Where-

   (a)  this section applies in relation to a unit of property in relation to
        a relevant lease agreement that came into operation on or after 22
        August 1979;

   (b)  at any time before the relevant lease agreement came into operation
        another lease agreement (in this sub-section referred to as the
        'earlier lease agreement') had been in operation in relation to the
        unit of property;

   (c)  the earlier lease agreement came into operation before 22 August 1979
        and was in operation on that date or came into operation on or after
        that date;

   (d)  the lessor under the relevant lease agreement, or an associate of that
        lessor, was the lessor under the earlier lease agreement;

   (e)  the lessee under the relevant lease agreement, or an associate of that
        lessee, was the lessee under the earlier lease agreement; and

   (f)  by reason of a disposal of the unit of property by a relevant
        taxpayer, an amount is required to be included in the assessable
        income of that relevant taxpayer of a year of income in accordance
        with sub-section (2) by virtue of the application of that sub-section
        in relation to the relevant lease agreement, then, in determining the
        amount to be so included in the assessable income of that relevant
        taxpayer as mentioned in paragraph (f), the amounts respectively
        applicable in accordance with paragraphs (a) and (b) of sub-section
        (2) shall be increased by any amounts that would be respectively
        applicable in accordance with those paragraphs if the earlier lease
        agreement were the relevant lease agreement.



"(14) In this section, unless the contrary intention appears- 'associate', in
relation to a person (in this definition referred to as the 'taxpayer') means-

   (a)  where the taxpayer is a natural person, other than a taxpayer in the
        capacity of a trustee-

        (i)    a relative of the taxpayer;

        (ii)   a partner of the taxpayer or a partnership in which the
               taxpayer is a partner;

        (iii)  if a person who is an associate of the taxpayer by virtue of
               sub-paragraph (ii) is a natural person-the spouse or a child of
               that person;

        (iv)   a trustee of a trust estate where the taxpayer or another
               person who is an associate of the taxpayer by virtue of another
               sub-paragraph of this paragraph benefits or is capable (whether
               by the exercise of a power of appointment or otherwise) of
               benefiting under the trust, either directly or through any
               interposed companies, partnerships or trusts; or

        (v)    a company where-

                (A)  the company is, or its directors are, accustomed or under
                     an obligation, whether formal or informal, to act in
                     accordance with the directions, instructions or wishes of
                     the taxpayer, of another person who is an associate of
                     the taxpayer by virtue of another sub-paragraph of this
                     paragraph, of a company that is an associate of the
                     taxpayer by virtue of another application of this
                     sub-paragraph or of any 2 or more such persons; or

                (B)  the taxpayer is, the persons who are associates of the
                     taxpayer by virtue of clause (A) and the preceding
                     sub-paragraphs of this paragraph are, or the taxpayer and
                     the persons who are associates of the taxpayer by virtue
                     of that clause and those sub-paragraphs are, in a
                     position to cast, or control the casting of, more than
                     50% of the maximum number of votes that might be cast at
                     a general meeting of the company;

   (b)  where the taxpayer is a company, other than a taxpayer in the capacity
        of a trustee-

        (i)    a partner of the taxpayer or a partnership in which the
               taxpayer is a partner;

        (ii)   if a person who is an associate of the taxpayer by virtue of
               sub-paragraph (i) is a natural person-the spouse or a child of
               that person;

        (iii)  a trustee of a trust estate where the taxpayer or another
               person who is an associate of the taxpayer by virtue of another
               sub-paragraph of this paragraph benefits or is capable (whether
               by the exercise of a power of appointment or otherwise) of
               benefiting under the trust, either directly or through any
               interposed companies, partnerships or trusts;

        (iv)   another person where-

                (A)  the taxpayer company is, or its directors are, accustomed
                     or under an obligation, whether formal or informal, to
                     act in accordance with the directions, instructions or
                     wishes of that person, or of that person and another
                     person or other persons, whether those directions,
                     instructions or wishes are communicated directly to the
                     taxpayer company or its directors, or through any
                     interposed companies, partnerships or trusts; or

                (B)  that person is, or that person and the persons who, if
                     that person were the taxpayer, would be associates of
                     that person by virtue of paragraph (a), by virtue of
                     clause (A), by virtue of another sub-paragraph of this
                     paragraph or by virtue of paragraph (c) are, in a
                     position to cast, or control the casting of, more than
                     50% of the maximum number of votes that might be cast at
                     a general meeting of the taxpayer company;

        (v)    another company where-

                (A)  the other company is, or its directors are, accustomed or
                     under an obligation, whether formal or informal, to act
                     in accordance with the directions, instructions or wishes
                     of the taxpayer company, of a person who is an associate
                     of the taxpayer company by virtue of another sub-
                     paragraph of this paragraph, of a company that is an
                     associate of the taxpayer company by virtue of another
                     application of this sub-paragraph or of any 2 or more
                     such persons; or

                (B)  the taxpayer company is, the persons who are associates
                     of the taxpayer company by virtue of clause (A) and the
                     other sub-paragraphs of this paragraph are, or the
                     taxpayer company and the persons who are associates of
                     the taxpayer company by virtue of that clause and those
                     sub- paragraphs are, in a position to cast, or control
                     the casting of, more than 50% of the maximum number of
                     votes that might be cast at a general meeting of the
                     other company; or

        (vi)   any other person who, if a third person who is an associate of
               the taxpayer company by virtue of sub- paragraph (iv) were the
               taxpayer, would be an associate of that third person by virtue
               of paragraph (a), by virtue of another sub-paragraph of this
               paragraph or by virtue of paragraph (c);

   (c)  where the taxpayer is a trustee of a trust estate-

        (i)    any person who benefits or is capable (whether by the exercise
               of a power of appointment or otherwise) of benefiting under the
               trust estate, either directly or through any interposed
               companies, partnerships or trusts;

        (ii)   where a person who is an associate of the taxpayer by virtue of
               sub-paragraph (i) is a natural person-any person who, if that
               natural person were the taxpayer, would be an associate of that
               natural person by virtue of paragraph (a) or this paragraph; or

        (iii)  where a person who is an associate of the taxpayer by virtue of
               sub-paragraph (i) or (ii) is a company-any person who, if that
               company were the taxpayer, would be an associate of that
               company by virtue of paragraph (b) or this paragraph; or

   (d)  where the taxpayer is a partnership-

        (i)    a partner in the partnership;

        (ii)   where any partner in the partnership is a natural person- any
               person who, if that natural person were the taxpayer, would be
               an associate of that natural person by virtue of paragraph (a)
               or (c); or

        (iii)  where any partner in the partnership is a company-any person
               who, if the company were the taxpayer, would be an associate of
               the company by virtue of paragraph (b) or (c); 'casual hiring
               agreement' means an agreement for taking a unit of property on
               hire where the agreement is of a kind ordinarily entered into
               by persons taking property on hire intermittently as the
               occasion requires on an hourly, daily, weekly or monthly basis;
               'consideration receivable', in relation to a disposal by a
               person of a unit of property or of an interest in a unit of
               property, means-

   (a)  in a case where the unit of property or the interest, as the case may
        be, is sold by the person otherwise than as mentioned in paragraph
        (b)-the consideration for the sale less the expenses of the sale;

   (b)  in the case where the unit of property or the interest, as the case
        may be, is traded-in by the person in connection with the acquisition
        by the person of another unit of property or is disposed of by the
        person in connection with the acquisition by another person of another
        unit of property-the amount by which the cost of the acquisition of
        that other unit of property was reduced by reason of the disposal of
        the first-mentioned unit of property or the interest, as the case may
        be or, if any consideration other than that reduction in the cost of
        acquisition of the other unit of property was received or receivable
        in respect of the disposal of the first-mentioned unit of property,
        the sum of the amount of the reduction and that other consideration;
        and

   (c)  in the case where the unit of property or the interest, as the case
        may be, is sold by the person with other assets and no separate value
        is allocated to the unit of property or the interest, as the case may
        be-the amount determined by the Commissioner; 'leased' means let on
        hire (including a letting on hire that is described in the relevant
        agreement as a lease) under an agreement other than-

   (a)  a hire-purchase agreement; or

   (b)  a casual hiring agreement.



"(15) For the purposes of this section, where-

   (a)  a person (in this sub-section referred to as the 'transferor')
        acquires property from the person who is the lessor in relation to the
        relevant lease agreement; and

   (b)  the transferor acquires the property under an agreement, arrangement
        or understanding entered into for the purpose, or for purposes that
        included the purpose, of securing that the property would, directly or
        indirectly, be acquired by the person who is the lessee in relation to
        the relevant lease agreement or by an associate of that lessee, the
        transferor shall be deemed to be an associate of that lessee.



"(16) In this section, unless the contrary intention appears-

   (a)  a reference to the cost of a unit of property or of an interest in a
        unit of property to a person shall be read as a reference to
        expenditure incurred by that person that is directly attributable to
        his acquiring ownership of the unit of property or of the interest, as
        the case may be;

   (b)  a reference to a person shall be read as including a reference to a
        partnership;

   (c)  a reference to the period of an agreement shall be read as including a
        reference to any period or periods for which the term of the agreement
        is extended;

   (d)  a reference to the lessee under a lease agreement, in relation to a
        time after the expiration of the lease agreement, shall be read as a
        reference to a person who had been the lessee under that lease
        agreement;

   (e)  if 2 or more persons constitute or constituted the lessee under a
        lease agreement, a reference to the lessee shall be read as a
        reference to those persons or to either or any of them; and

   (f)  a reference to an associate of a person shall be read as a reference
        to a person who was such an associate at any relevant time.



"(17) For the purposes of paragraph (a) of sub-section (16), expenditure of a
capital nature incurred by a person in respect of property acquired by the
person, being expenditure incurred after the time of acquisition, shall be
taken to be expenditure that is directly attributable to the person's
acquiring ownership of the property.



"(18) In this section, a reference to the market value of property at a
particular time shall, if there is insufficient evidence of the market value
at that time, be read as a reference to such amount as, in the opinion of the
Commissioner, is fair and reasonable.". 


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