Income Tax Act 2007 section 681CD

Long funding finance leases

Section 681CD provides an exception from the commercial rent restriction in section 681CC for payments made under long funding finance leases.

• This section modifies how the commercial rent cap in section 681CC applies by carving out certain lease payments.
• Where a lease qualifies as a long funding finance lease under the capital allowances rules, payments under that lease are excluded from the restriction.
• The exclusion applies from the lessee's perspective, based on how the payment is classified under Chapter 6A of Part 2 of the Capital Allowances Act 2001.
• The effect is that long funding finance lease payments are not subject to the rule limiting tax deductions to a commercial rent amount.