Section 88: Leases for other than an adequate rent

88. Leases for other than an adequate rent (1) Where property owned by a person or by 2 or more persons, whether jointly or in undivided ownership, or by a société, is leased to a relative of any of those persons or any associate of the société or to a related company, or I5 – 49 [Issue 6] Income Tax Act where property owned by a company is leased to a shareholder or a relative of a shareholder or to any other person, and the rent is not an adequate rent for the property or the lease makes no provision for the payment of rent, there shall be deemed to be payable under the lease a rent that is equal to an adequate rent for the property, and that rent shall be deemed to be income derived by the lessor— (a) where a rent is payable under the lease, in respect of the periods for which the rent is so payable; or (b) where no rent is payable under the lease, in respect of such periods as the Director-General determines. (2) The rent deemed to be payable under subsection (1) shall accrue from day-to-day during the period in respect of which it is payable, and shall be apportioned accordingly. (3) For the purpose of this section— “adequate rent” means the amount of rent which the Director-General determines to be adequate for the period for which the determination is made.