Published on 01 Jul 08
by "AUSTRALIAN TAX FORUM" JOURNAL ARTICLE
Finance leases are perceived to have anomalous tax benefits, such as fully deductible loan repayments and the ability to transfer tax preferences to the non-economic owner of an asset. This has resulted in several attempts at correction, the most recent being in the context of the TOFA rules. This paper reviews those anomalies in the context of the economic benefit of a finance leases when compared with the way that they are presently taxed and, also, the attempts to redress them. It argues that the taxation of finance leases should not change as some of those perceptions do not stand up under scrutiny. Also, it argues that one other perceived anomalous tax effect puts the debt providers for the acquisition of an asset on the same basis as the equity owners of the asset and, therefore, is unobjectionable. In that regard, the paper extends the understanding of tax and finance leases.
Click here to expand/collapse more articles by Gordon MACKENZIE.
BA LLb (Qld) LLM (Lon) FTIA, Senior Lecturer Business Law Discipline, Faculty of Economics Sydney University
Current at July 2008
Click here to expand/collapse more articles by Geoffrey HART.