Income Tax Act 2007 section 614BF

Current lessor taxed by reference to accountancy rental earnings

Section 614BF requires a lessor to be taxed on the higher of their accountancy rental earnings or the normal rent from a lease, ensuring that income tax reflects the economic substance of leasing arrangements.

• Where the accountancy rental earnings from a lease exceed the normal rent for a period of account, the lessor is taxed on the higher accountancy figure instead
• The lessor is treated as having been entitled to rent equal to the accountancy rental earnings for that period
• The deemed rent is treated as accruing evenly over the portion of the accounting period during which the asset is leased
• The lessor is treated as becoming entitled to the rent as it accrues on that even basis