The effect of CTA 2010, Pt. 19, Ch. 1 is to restrict the tax relief and to carry forward the disallowed payments.

Tax relief for the rent, or other payment, made by the transferor is limited to the ‘commercial rent’ for the period for which the payment is made (CTA 2010, s. 838).

A commercial rent is the rent due under a notional lease. The notional lease is deemed:

to be negotiated in the open market at the time when the actual lease was created;

to have the same duration as the actual lease; and

to have the same terms as the actual lease with regard to the liability for maintenance and repairs.

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