In broad terms, the object of the legislation is to restrict tax relief for the rent, or other payment, made by the transferor (or associated person) to the ‘commercial rent’. However, this is achieved through a complicated mechanism contained in ITA 2007, s. 681AD.

The process can be approached as follows.

(1)Identify the non-excluded element of the payment or payments for which the transferor (or associated person) is liable under ITA 2007, s. 681AA(1) or 681AB(1).

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