Lease Inducement Payments to Become Taxable

On 26 July 2012 the IRD announced proposals to make lease inducement payments taxable.

A lease inducement payment is a payment made by a landlord to a prospective tenant as an inducement to enter a commercial lease.

At present for income tax purposes, a lease inducement payment is generally deductible for the landlord making the payment but is tax-free for the tenant receiving the payment. Under the IRDs proposal the inducement payment received by the tenant will become taxable income.

The new provisions will be back dated to apply to arrangements entered into or after 26 July 2012, i.e. the date the IRD announced its proposal.

2012-09-10T09:00:25+00:00September 10th, 2012|Accounting|