In practical terms, an operating lease is the kind of lease a
person has when hiring an asset for a period shorter than its
likely useful life. Most typically, a person who hires a van for a
week is taking out an operating lease.
In hiring an asset under such a lease the lessee normally
takes on few of the risks and rewards of ownership of the asset. It
is the lessor who stands to gain or lose from the speed the asset
depreciates. The lessor usually retains responsibility for at least
some of the running costs associated with the leased asset. Thus
the typical operating lessor will be a manufacturer or dealer in
the assets in question.
Guidance on the tax treatment of rentals (payable or
receivable) under operating leases is at
BIM61075.
