Lease Incentive Payment - Accounting

[Pushka]

Hi Folks
The people here were a lifesaver a few years ago with regard to CGT so I am hoping for some similar advice with this one.

We have a commercial lease for our business that expires in 2 years. The landlord wishes us to exit 12 months early and will be providing us an incentive payment to do so. This will be approx 50% of rent, not including extras such as council, water and land tax rates which we will pay in full.

Our accountant suggests this will trigger a CGT, which for us means payment as we have no losses to offset. I have done some research but am simply unable to work this out.

Can anyone help?

 

[marg4000]

You have already received advice from a qualified professional, so I am not sure what other information an anonymous forum can give.

If you are not happy with your accountant, why not change accountants?
Marg

 

[Pushka]

You have already received advice from a qualified professional, so I am not sure what other information an anonymous forum can give.

If you are not happy with your accountant, why not change accountants?
Marg

Goodness. That isn't helpful. My accountant is not necessarily expert in all matters. Thankfully last time I sought help on this forum I received information that my previous accountant was not aware of. I haven't been here for a while so things seemed to have changed. Not for the better.

 

[Terry_w]

see http://www.austlii.edu.au/au/legis/cth/consol_act/itaa1997240/s104.5.html

 

[Rob G.]

Its most likely CGT for a lease surrender payment.

It is also possibly income which would take a priority over CGT.

If it is CGT, then the small business concessions may be available such as extra discounts or rollover relief.

However, your accountant would know the facts better in order to form an opinion from a number of possibilities.

Cheers,

Rob

 

[AXXO]

see http://www.austlii.edu.au/au/legis/cth/consol_act/itaa1997240/s104.5.html

That's CGT Event C2