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Additional calculation rule for reducing certain receipts |
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287 | Circumstances in which additional calculation rule applies |
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(1) | The rule in section 288 (the additional calculation rule) applies in relation to the |
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calculation of receipts under— |
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section 277 (lease premiums), |
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section 279 (sums payable instead of rent), |
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section 280 (sums payable for surrender of lease), |
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section 281 (sums payable for variation or waiver of term of lease), or |
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section 282 (assignments for profit of lease granted at undervalue). |
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(2) | It applies if conditions A and B are met. |
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(a) | in the case of a receipt under section 277, 279 or 280, the lease is granted |
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(b) | in the case of a receipt under section 281, the lease was granted out of a |
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(c) | in the case of a receipt under section 282, the assignment is of a taxed |
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(4) | A lease is a “taxed lease” for the purposes of this Chapter if— |
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(a) | there is a receipt under any of sections 277 to 282 in respect of the lease, |
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(b) | there would be such a receipt, but for the operation of the additional |
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calculation rule in the calculation of its amount. |
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| In this Chapter such a receipt is referred to as a “taxed receipt”. |
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(5) | Condition B is that the taxed receipt, or if there is more than one, at least one of them, |
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(6) | See section 290 for an explanation of when a taxed receipt has an “unused |
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288 | The additional calculation rule |
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(1) | The rule in this section applies if the conditions mentioned in section 287 are |
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(2) | The additional calculation rule is that the amount given by the formula in |
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section 277, 279, 280, 281 or 282 must be reduced by the amount calculated in |
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accordance with this section in order to give the amount of the receipt under |
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(3) | The amount of the reduction is— |
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(a) | if there is one taxed receipt which has an unused amount, the basic |
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relieving amount by reference to that receipt, and |
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(b) | if there is more than one taxed receipt which has an unused amount, the |
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total of the basic relieving amounts by reference to each receipt, |
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| adjusted, if necessary, in the light of section 289(5) (reduction not to exceed |
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(4) | The basic relieving amount by reference to a taxed receipt is given by the |
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formula—![equation: over[cross[char[A],times[char[L],char[R],char[P]]],times[char[T],char[R],char[P]]]](missing.gif) |
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A is the unreduced amount of the taxed receipt (which is, generally, the |
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LRP is the receipt period of the receipt under calculation, and |
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TRP is the receipt period of the taxed receipt. |
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(5) | But the basic relieving amount is different if section 289(2) or (4) applies |
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(6) | For the purposes of this Chapter, the “receipt period” of a receipt is— |
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(a) | in the case of a receipt under section 277 or 280, the effective duration |
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(b) | in the case of a receipt under section 279, the period in relation to which |
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the sum payable instead of rent is payable, |
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(c) | in the case of a receipt under section 281, the period for which the |
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variation or waiver has effect, and |
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(d) | in the case of a receipt under section 282, the effective duration of the |
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lease remaining at the date of the assignment. |
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289 | The additional calculation rule: special cases |
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(1) | This section explains how section 288 operates in some special cases. |
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(a) | the receipt under calculation is under any of sections 277 to 281, and |
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(b) | the lease does not extend to the whole of the premises subject to the |
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| the basic relieving amount by reference to a taxed receipt is calculated by |
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multiplying the amount given by the formula in subsection (4) of section 288 |
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by the fraction of those premises which is subject to the lease. |
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(3) | This fraction is calculated on a just and reasonable basis. |
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(4) | If the basic relieving amount given by section 288(4) or subsection (2) above by |
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reference to a taxed receipt would otherwise exceed the unused amount of the taxed |
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receipt, the basic relieving amount is the unused amount. |
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(5) | If the amount of the reduction under section 288 would otherwise exceed the |
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amount given, in respect of the receipt under calculation, by the formula in |
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section 277, 279, 280, 281 or 282, the amount of the reduction is equal to the |
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amount given by the formula. |
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290 | Meaning of “unused amount” and “unreduced amount” |
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(1) | For the purposes of this Chapter, a taxed receipt has an “unused amount” if the |
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unreduced amount exceeds the total of the reductions and deductions referred to in |
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(2) | In this Chapter the “unreduced amount” of a taxed receipt is the amount given, |
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in respect of the taxed receipt, by the formula in section 277, 279, 280, 281 or |
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(3) | Subsection (4) applies to a taxed receipt under section 277 (lease premiums) as |
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a result of section 278 (amount treated as lease premium where work required). |
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(4) | If the obligation to carry out work included the carrying out of work which |
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gives, or will give, rise to qualifying expenditure under CAA 2001, the |
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unreduced amount of the taxed receipt is calculated as if the obligation had not |
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included the carrying out of that work. |
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(5) | The reductions and deductions mentioned in subsection (1) are— |
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(a) | the reductions under section 288 by reference to the taxed receipt, |
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(b) | the deductions allowed in calculating the profits of a trade, profession or |
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vocation for expenses under section 61 (tenant under taxed lease who uses land |
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in connection with trade treated as incurring expenses) by reference to the |
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(c) | the deductions allowed in calculating the profits of a property business for |
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expenses under section 292 (tenant under taxed lease who uses premises for |
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purposes of property business treated as incurring expenses) by reference to the |
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(6) | For the purposes of this Chapter references to a reduction under section 288 by |
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reference to a taxed receipt are to a reduction under that section so far as |
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attributable to the taxed receipt. |
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Deductions in relation to certain receipts |
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291 | Deductions for expenses under section 292 |
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(1) | Section 292 (tenants under taxed leases treated as incurring expenses) applies |
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in calculating the profits of a property business carried on by the tenant under |
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a taxed lease for the purpose of making deductions for the expenses of the |
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(2) | A deduction is allowed for an expense under section 292 for a qualifying day |
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on which the whole or part of the premises subject to the taxed lease is— |
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(a) | occupied by the tenant for the purpose of carrying on the property |
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(3) | But any deduction for an expense under section 292 is subject to the application |
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of any provision of Chapter 4 of Part 2 (as applied to property businesses by |
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(4) | The amount of the deduction for an expense under section 292 for a qualifying day by |
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reference to a taxed receipt may be reduced in order to comply with section 295 (limit |
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on reductions and deductions). |
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(5) | For the meaning of expressions used in this section, see in particular— |
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section 287(4) (“taxed lease”), and |
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section 287(4) (“taxed receipt”). |
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292 | Tenants under taxed leases treated as incurring expenses |
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(1) | The tenant under a taxed lease is treated as incurring an expense of a revenue |
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nature in respect of the premises subject to the taxed lease for each qualifying |
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(2) | If there is more than one taxed receipt, this section applies separately in |
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relation to each of them. |
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(3) | A day is a “qualifying day”, in relation to a taxed receipt, if it falls within the |
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receipt period of the taxed receipt. |
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(4) | The amount of the expense for the qualifying day by reference to the taxed |
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receipt is given by the formula—![equation: over[char[A],times[char[T],char[R],char[P]]]](missing.gif) |
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A is the unreduced amount of the taxed receipt, and |
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TRP is the number of days in the receipt period of the taxed receipt. |
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(5) | This section is subject to sections 293 and 294 (restrictions on expenses where |
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the additional calculation rule is relevant). |
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(6) | For the meaning of expressions used in this section, see in particular— |
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section 288(6) (“receipt period”), and |
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section 290(2) to (4) (“unreduced amount”). |
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293 | Restrictions on section 292 expenses: the additional calculation rule |
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(1) | This section applies if, in calculating the amount of a receipt (“the lease |
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premium receipt”), there is a reduction under section 288 (the additional |
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calculation rule) by reference to the taxed receipt. |
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(2) | Subsections (3) to (5) provide for the application of section 292 for a qualifying |
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day that falls within the receipt period of the lease premium receipt. |
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(3) | The tenant under the taxed lease is treated as incurring an expense under |
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section 292 for the qualifying day by reference to the taxed receipt only if the |
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daily amount of the taxed receipt exceeds the daily reduction of the lease |
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(4) | If the condition in subsection (3) is met, the amount of the expense under |
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section 292 for the qualifying day by reference to the taxed receipt is equal to |
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(5) | If the qualifying day falls within the receipt periods of more than one lease premium |
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receipt, the reference in subsection (3) to the daily reduction of the lease premium |
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receipt is to be read as a reference to the total of the daily reductions of each of the lease |
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premium receipts whose receipt period includes the qualifying day. |
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the “daily amount” of the taxed receipt is given by the formula—![equation: over[char[A],times[char[T],char[R],char[P]]]](missing.gif) |
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|
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A is the unreduced amount of the taxed receipt (see section 290(2) to |
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TRP is the number of days in the receipt period of the taxed receipt, and |
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the “daily reduction” of a lease premium receipt is given by the formula—![equation: over[times[char[A],char[R]],times[char[R],char[R],char[P]]]](missing.gif) |
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AR is the reduction under section 288 by reference to the taxed receipt |
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(see section 290(6)), and |
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RRP is the number of days in the receipt period of the lease premium |
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(7) | Section 294 explains how this section operates if the lease premium receipt is |
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in respect of a lease that has been granted out of the taxed lease and does not |
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extend to the whole of the premises subject to the taxed lease. |
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294 | Restrictions on section 292 expenses: lease of part of premises |
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(1) | This section applies if— |
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(a) | a lease has been granted out of the taxed lease, |
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(b) | the lease does not extend to the whole of the premises subject to the |
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(c) | in calculating the amount of a receipt under any of sections 277 to 281 |
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(receipts in respect of lease premiums or sums payable instead of rent, |
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for surrender of lease or for variation or waiver of term of lease) in |
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respect of the lease (“the lease premium receipt”), there is a reduction |
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under section 288 by reference to the taxed receipt. |
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(2) | Subsections (3) to (5) apply for a qualifying day that falls within the receipt |
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period of the lease premium receipt. |
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(3) | Sections 292 and 293 apply separately in relation to the part of the premises |
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subject to the lease and to the remainder of the premises. |
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(a) | more than one lease that does not extend to the whole of the premises subject to |
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the taxed lease has been granted out of the taxed lease, and |
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(b) | the qualifying day falls within the receipt period of two or more lease premium |
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receipts that relate to different leases, |
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| sections 292 and 293 apply separately in relation to each part of the premises subject to |
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a lease to which such a receipt relates and to the remainder of the premises. |
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(5) | Where sections 292 and 293 apply in relation to a part of the premises, A |
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becomes the amount calculated by multiplying the unreduced amount of the |
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taxed receipt by the fraction of the premises constituted by the part. |
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(6) | This fraction is calculated on a just and reasonable basis. |
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