A ‘
mixed lease’ is an arrangement involve the
leasing of
The ‘other assets’ may be assets such as land or
plant or machinery of a different description. Therefore a mixed
lease might be a lease of equipment with the factory in which it is
housed or a lease of two types of industrial equipment.
The plant or machinery in the mixed lease is referred to as
the ‘
relevant plant or machinery’.
This legislation only applies to what are referred to as
‘
eligible mixed leases’, that is arrangements
that
An agreement or arrangement that would be treated as a lease
under GAAP immediately after the commencement of the term of the
lease is treated as a lease during the pre- commencement period.
The pre-commencement period is the period from the inception of the
lease to the commencement of the term of the lease (CAA01/S70L (3)
and (4)). This is similar to the approach taken in CAA01/S70K, the
definition of a plant or machinery lease.
Where a lease is an eligible mixed lease, it is treated as
two or more separate leases of the relevant plant or machinery and
of the other assets. These notional separate leases are called
‘
derived leases’.
You should interpret ‘plant or machinery of any
particular description’ narrowly. That is to say, any asset
that can be described and identified as distinct from any other
asset would be plant or machinery of a particular description. So,
for example, two cars of the same make and model could be plant or
machinery of two descriptions as long as each could be identified.
In practice, however, where a number of similar items are leased
such as cars or photocopiers there may be no practical need to
identify each derived lease as each would be identical and nothing
would be gained by splitting them up into separate derived
leases.
