n Tax Breaks Newsletter - The perils of contracts drawn without regard to tax consequences

Volume 2006, Issue 250
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Extracted from text ... November 2006 5 THE PERILS OF CONTRACTS DRAWN WITHOUT REGARD TO TAX CONSEQUENCES EVERY single contract in terms of which money or property changes hands has tax consequences for the parties involved, points out PricewaterhouseCoopers. The parties need to consider many issues, for example, is the expenditure specified in the contract taxdeductible for the payer? Is it taxable in the hands of the beneficiary or payee? And this analysis needs to go even further - if the payment involved has tax implications, in what tax year is it deductible or taxable? And - very importantly - could the contract be drawn up in a different way that produces a more favourable tax result for some or all of those involved? Terry McCarthy, ..

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