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Tax Alert - August 2012


Tax AlertTax Alert is a monthly publication that keeps you up to date with the latest developments in tax. The alert is compiled by our national tax specialists who are continually monitoring the outlook for new tax developments and analysing the implications for our clients.

Tax free lease inducements look done for in latest Government tax grab

In late July, the Government released a consultation paper airing its concerns over the tax treatment of lease inducement payments made by a landlord to a tenant to encourage them to enter into a commercial lease. Typically, the lease inducement payment is treated as tax deductible for the payer (generally the landlord) but treated as a non-taxable capital receipt for the recipient (the tenant) on the basis that it relates to the structure of the tenant’s business. Inland Revenue, in its audits, has detected an increasing trend towards making these payments, which it attributes to the economic downturn, as it is an option for landlords to attract tenants without needing to reduce rental income payable.

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