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Proposed Changes to Taxation of Lease Inducement Payments

By Kay Keam - 2 Oct 2012

In July this year Inland Revenue released a policy document setting out changes to the treatment of lease inducement payments.  Those changes were to have effect to inducements payable on leases entered into on or after 26 July 2012.  As a result of feedback and consultation, Inland Revenue announced changes to the initial proposal last week.

Briefly those changes include:

  1. The effective date has been pushed out to 1 April 2013 so inducements payable on leases entered into on or before 31 March 2013 can remain tax free (if structured correctly).
  2. Lease inducement payments will be deductible by landlords.
  3. Income and expenditure arising from these payments will be spread evenly over the term of the lease.

We have been waiting since July for the specific detail of the policy.  The policy will apply to other leasing transactions such as surrenders, subleases, licences, assignments and renewals.  It is important to seek tax advice as part of any leasing transaction.  We will keep you updated as more detail is released. 


Media statement from Hon. Peter Dunne, Minister of Revenue


Kay Keam

Mike Worsnop


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