Finance Lease Taxation: Giving Tax Losses to Lenders
Journal of Law and Financial Management, Vol. 6, No. 1, pp. 30-35, June 2007
10 Pages Posted: 23 Apr 2008
Abstract
Accounting standards characterise leases as either finance or operating, with the difference between the two based on concepts of economic ownership, but Australian taxation law does not recognise any such difference, except in three limited cases.
The lack of separate recognition of finance leases in tax law produces advantageous tax outcomes including in substance: Deductible repayment of a loan, Deductible of the cost of the leased asset, and Transfer of capital allowance deductions to the non-economic owner.
Keywords: finance lease, operating lease, taxation
JEL Classification: M40, M41
Suggested Citation: Suggested Citation