A sale and finance leaseback is very similar to an ordinary sale
and leaseback. Broadly there is a sale and finance leaseback if a
person carrying on a qualifying activity sells an asset used in a
qualifying activity and leases it back under a finance lease. There
is also a sale and finance leaseback if the asset is leased back to
a person connected with the seller. It does not matter if there is
a gap between the sale and the leaseback. All that matters is that
the asset is not used for any qualifying activity other than
leasing during the gap. It also does not matter what the asset is
used for after the leaseback.
Example Robert has a yacht that he uses in his
trade of running cruises. He sells the yacht to Jimmy. Jimmy leases
the yacht out for a few months and then he leases it back to Robert
under a finance lease. This is a sale and finance leaseback. Jimmy
used the yacht for leasing and nothing else during the gap between
the sale and the finance leaseback. If, however, Jimmy had used the
yacht for running cruises before he leased it back to Robert there
would not be a sale and finance leaseback.
A trader may acquire an asset with a long build time financed
through a finance lease. The anti- avoidance legislation does not
apply if the asset is ordered by the lessor initially or if the
purchase contract is novated to the lessor before the asset is
brought into use for the purposes of the trade and:
Do not treat the testing of the asset or use for the training of operators before it is accepted from the manufacturer as bringing it into use in this context.
