Tax Law
When a new office block is built in the centre of Sydney, the developer is keen to have a particular law firm as its first tenant so that it can use that firm’s tenancy in its advertisements. The law firm is happy to move from its current premises but would prefer to move from the center of Sydney to somewhere where the rent is cheaper. To persuade the law firm, the developer promises, in return for the law firm signing up as a tenant for 10 years:
1. a lump sum of $15 million
2. a four-year rent-free period
3. an interest-free loan that will be used by the law firm to fit out the new premises, and
4. a two-weeks holiday in USA for each of the law firm partners.
Explain the consequences for the law firm if it accepts the lease incentives offered by the developer
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