Income Tax Act 2007 section 742E

Value of benefit provided by making land available

Section 742E sets out how to calculate the taxable value of a benefit that arises when land is made available for a person's use, as part of the rules on benefits from transactions with persons abroad.

• The benefit value for each tax year is the rental value of the land during the period it is made available, minus any amounts the user pays towards the land's availability or its repair, insurance and maintenance.
• This valuation rule does not apply where the person providing the benefit transfers their entire interest in the land to the user — a different calculation applies in that case.
• Rental value is based on the annual value, which is the rent reasonably expected on a hypothetical year-to-year letting where the tenant pays all usual taxes, rates and charges and the landlord bears repair, insurance and maintenance costs.
• When calculating the annual value, the only amounts deductible for landlord-provided services are the actual costs of services other than repair, insurance or maintenance of the property.