Asymmetry is a feature of our tax system and does not justify a change particularly when correcting the assumed asymmetry is “one way” only. That is, the proposals do not confirm the deductibility of lease incentives to landlords, with the risk that the receipt is taxable but the payment is capital.
The proposal will also require spreading of both the income (receipt) and expense, if deductible, over the term of the lease or until the first rent review period.
Importantly, the changes are “legislation by Officials’ edict”, creating uncertainty over the treatment of lease incentive payments until legislation (if any) is passed.
We do not support such an application.
If you have any questions on the above, please speak to your usual KPMG advisor or contact
Ross McKinley or John Cantin.