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LEASES (LEASE PREMIUM s11(f) (Lessee (s11(f) deduction, over the lease…

- - - - Includes
      - Excludes
    - - letting of movable property IF
        
        R&M cost is borne by the lessor AND
        
        subject to any claim that the lessor may have against the lessee
        
        hired by general public for a period < 1 month
        
        risk of of destruction, loss or other disadvantage remains with the lessor
- - - - extended lease @ nominal rentals
    - - lessor abandoned the lease agreement
    - - Formal acquisition with little or no consideration paid
      - Formal change in ownership
      - lessee becomes owner
- - - - in the year improvements are effected
      - if the commissioner deems necessary
      - cost - PV of improvement over the lease term @ 6% interest
    - - Amount stipulated OR
      - Fair and reasonable value (if no amt stipulated)
  - - - lease term calculated from date of completion
      - apportion for months the asset is used in production of income
      - over the lease term (limited to 25 years)
    - - contract must state that there is an obligation to effect improvements
      - can only claim if using asset in the production of income
- - - - s11(f) will fall away
      - s11(g) can still be claimed
      - i.e. the rest of the allowances
      - on date of termination claim remaining allowance
    - - the commissioner determines what is reasonable
- - - - "Consideration passing from a lessee to a lessor which is rental in nature over and above the rental payable by the lessee
- - - - for his own benefit
      - NOT of a capital nature
      - received by or accrued to taxpayer
      - in cash or otherwise
      - total amount
  - - - in the production of income
      - in the carrying on of a trade
      - actually incurred
      - NOT of a capital nature s23H ans s23(g)
      - expenditure and losses
- - - - Aggregate of amts payable > Cash value of supply
      - Purchaser is the conditional owner
        
        seller can take back if purchaser fails to comply with terms of agreement
      - Include finance charges (stipulated in agreement)
      - Purchaser must
        
        responsible for R&M
        
        any other costs associated with asset
        
        take out insurance
        
        accepts full R&R in relation to ownership
      - sold therefore change in ownership
        
        sold at stated/determinable sum of money at a stated/det future date OR
        
        whole or in part in installments over a period in future
    - - Aggregate of amts payable & RV on termination > Cash value
      - Lessee entitled to use for a period of AT LEAST 12 months
      - Include finance charges (stipulated in lease)
      - Lessee
        
        Accepts full risk BUT no ownership
        
        insurance
        
        maintenance
        
        loss
        
        repair
        
        destruction
        
        accepts risk for R&M
        
        reimburses lessor for insurance of goods
      - rent therefore NO change in ownership
        
        rent at stated/determinable sum of money at a stated/det future date OR
        
        whole or in part in installments over a period in future
      - Lessor
        
        bears full risk of loss
- - - - right to use an asset under an ICA to be a supply
      - deems supply of the use OR
  - - - Earlier of:
        
        delivery of goods OR
        
        payment of consideration
  - - - seller (lessor) is a banker or financier
      - amount => sum of cost to the banker/financier
      - incl related costs and incl tax under s7(1)(a)
    - - amount => cash price of the goods
      - incl any tax and related charges for erection, assembly or installation (incl tax)
      - seller (lessor) is a dealer
  - - - cash value
        
        defined in s1 of the VAT Act
        
        excl finance charges and interest
      - any part payment constitutes payment of the consideration
      - account for VAT on the full amount at the beginning of the lease