Income Tax Act 2007 section 681BF

Position where rent reduces

Section 681BF deals with what happens when the rent payable under a new lease drops from one period to the next, triggering the lease to be treated as having a shorter term for tax purposes.

• If the rent for any rental period before the fifteenth anniversary of the new lease exceeds the rent for the immediately following period of the same length, the lease is treated as ending at the end of that higher-rent period.
• A "relevant period" is any rental period of the new lease that ends before the fifteenth anniversary of the date on which the lease term begins.
• The "following comparable period" is the rental period of the same duration that starts the day after the relevant period ends, and the rent for any period is the total rent payable under the new lease for that period.
• All quarterly rental periods are treated as being of the same duration, and likewise all monthly rental periods are treated as being of the same duration.