Income Tax Act 2007 section 681AI

Exclusion of service charges etc.

Section 681AI requires that service charges, payments for the use of non-land assets, and tenant-borne rates are stripped out of lease payments before comparing those payments against the commercial rent for the purposes of the sale and leaseback rules.

• Payments for services, the use of non-land assets, and rates normally borne by the tenant must be excluded from the lease payment when testing it against commercial rent under sections 681AD and 681AE
• The excluded amount must be just and reasonable — it is not simply whatever the lease document states
• Any clause in a lease or agreement that purports to fix the portion attributable to services or asset use is not conclusive and can be challenged
• A "relevant asset" means any property or rights other than land or an interest in land