New Zealand


  • Service: Tax
  • Type: Business and industry issue
  • Date: 27/07/2012

Contact us

Ross McKinley

Partner, Tax

+64 9 367 5904


John Cantin

Partner, Tax

+64 4 816 4518

Darshana Elwela

National Tax Director

+64 9 367 5940

Taxmail - Lease inducement payments to be taxable 

Issue 4, July 2012


The Inland Revenue and Treasury have released an issues paper which proposes to make lease inducement payments taxable, for lease arrangements entered into or after 26 July 2012. KPMG strongly disagrees with the proposals. 


The reason given for this change is the asymmetry in treatment of lease incentives between the lessee (non-taxable) and the lessor (generally deductible). However, there are numerous other examples in the tax system where there is asymmetry, including in favour of Government. 

taxmail - lease inducement payment
Download Now
PDF files require Adobe Reader to view

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.


Our tax advisory team has the skills and commitment to help you to be competitive and compliant in all areas of business tax.
Taxmail - Comment on topical tax issues from KPMG NZ Tax. 
Share this

Sign up now

Subscribe to selected content and receive email alerts when new content is available for viewing on this site.


Already a member? Login


Not a member? Register