108 Government Finance Statistics Manual 2014
agreement, the owner can extend or withhold permis-
sion for continued use of the asset from one year to
the next. It constitutes an agreement whereby the legal
owner of a natural resource that is considered to have
an infi nite life makes it available to a lessee in return
for a regular payment recorded as property income
and described as rent.^35
5.123 On the accrual basis of recording, rent ac-
crues continuously to the asset’s owner throughout
the period of the contract. Th e rent recorded for a
particular reporting period is, therefore, equal to the
value of the accumulated rent that becomes payable
over the reporting period and may diff er from the
amount of rent that becomes due for payment or is
actually paid during the period.
5.124 Rent excludes payments receivable by the
owners of natural resources if such payments permit
the resource to be used to extinction—such activity is
regarded as a sale (see paragraphs 8.54 and A4.19) and
possibly depletion (see paragraph 10.52) of the non-
produced asset. Also excluded from rent are amounts
receivable by owners of natural resources when they
allow the resource to be used for an extended period
of time in such a way that, in eff ect, the user controls
the use of the resource during this time with little, if
any, intervention from the legal owner. Th is option
leads to recording a transaction in an asset, classifi ed as
contracts, leases, and licenses (31441), for the user, dis-
tinct from the resource itself (see paragraphs 8.56 and
A4.19).
5.125 Two types of resource rent are described
ahead in detail: rent on land and rent on subsoil re-
sources. Resource rent on other natural resources
follows the pattern laid out by these two types. Th e
boundary between resource rent and the rental of pro-
duced assets is discussed in paragraphs 5.131–5.132.Rent on land.
5.126 Rent on land is recorded as accruing con-
tinuously to the landowner throughout the period
of the contract. Rent may be paid in cash or in kind.
Under sharecropping or similar schemes, the value of
the rent payable is not fi xed in advance in monetary(^35) A more detailed discussion on the boundary between alterna-
tive uses of natural resources is presented in the context of the
discussion on leases, licenses, permits, and other contracts to use
a natural resource in Appendix 4.
terms and is measured by the value at basic prices^36
of the crops that the tenants are obliged to provide to
the landowner government unit under the contract
between them.
5.127 Rent on land also includes the rent payable
to general government sector units for the use of in-
land waters and rivers (for the right to exploit such
waters for recreational or other purposes, including
fi shing) or noncultivated land (for the right to cut
timber on such land). In the case of permits that allow
timber felling in a natural forest, it is common for
these fellings to be allowed under strict limits with a
fee payable per unit volume of timber felled (stump-
age). Th e limits are usually such that the harvest of
timber is sustainable and so these payments should
also be recorded as rent (1415). However, if a unit is
given permission to fell an area of natural forest, or to
fell at its discretion without any restriction in perpe-
tuity, the payments made to the owner constitute the
sale of an asset. For those forests that are produced
assets, the extraction of timber is treated as the sale
of a product.
5.128 A landowner may be liable to pay land taxes
or incur certain maintenance expenses solely as a
consequence of owning the land. By convention, such
taxes or expenses are recorded as payable by the ten-
ant who is deemed to deduct them from the rent that
he would otherwise be obliged to pay to the land-
owner. Rent reduced in this way by taxes or other ex-
penses for which the landowner is liable is described
as “aft er-tax rent.” Th e adoption of this convention
refl ects the true economic nature of the transactions
involved in the accounts of both parties.
Rent on subsoil assets
5.129 Th e ownership of subsoil assets in the form
of deposits of minerals or fossil fuels (coal, oil, or
natural gas) depends upon the way in which property
rights are defi ned by law and also on international
agreements in the case of deposits below interna-
tional waters. In some cases the assets may belong to
the owner of the ground below which the deposits are
located, but in other cases they may belong to a local
or central government unit.(^36) Basic prices are prices before taxes on products are added
and subsidies on products are subtracted.