1.1.C.207 Commercial lease value

Usage

This definition applies to all payments.

Definition: Commercial lease value for non-farming properties

The commercial lease value of an asset is the value that can reasonably be obtained by using the asset. Generally this is the asset's market RENTAL value.

If a person's asset does not have a commercial lease value THEN notional income CANNOT be assessed.

Explanation: The ZERO commercial lease value is taken to be a value of LESS than 2.5% of the asset's value.

Example: The following assets have no commercial lease value:

• most types of livestock, or
• private company shares that CANNOT be sold, or
• loans that CANNOT be repaid, or
• a life insurance policy's surrender value.

Definition: Commercial lease value for farming properties

The commercial lease value for a person's farming property is ALWAYS assessed by the AVO. Delegates MUST tell the person how the valuation was calculated. A delegate MAY request a reassessment if the valuation does not SUFFICIENTLY take into account the:

• inherent characteristics of the land (see example 1), OR
• demand for the land, OR
• general farm incomes, OR
• legal impediments to commercial use (see example 2), OR
• expenses incurred if the farm is leased (see example 3), OR
• value of water licences, if relevant, OR
• value of tobacco quotas, if relevant.

Example 1: Soil conditions, erosion, salinity, and condition of fencing.

Example 2: An existing lease.

Example 3: Rates, insurance and interest.

Policy reference: SS Guide 4.6.7.80 Notional Ordinary Income - Overview, 4.6.7.110 Notional Ordinary Income - Person's Farm Used by a Family Member, 4.6.7.120 Notional Ordinary Income - Other Farming Situations

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Last reviewed: 5 May 2008