Commentary

E1.511 Meaning of annual payment as derived by case law

Personal and employment tax

E1.511 Meaning of annual payment as derived by case law

E1.511 Meaning of annual payment as derived by case law

The decisions of the courts over the years have produced certain principles to be applied to determine whether a payment is an annual payment. Many of these cases were concerned with the right to deduct tax from particular payments (see E1.801).

Some of the cases contain different decisions on what seem to be similar facts, the distinction depending on the precise circumstances and, possibly, the wording in a particular document. However the main characteristics of an annual payment should be:

  1.  

    •     pure income profit, ie straight forward income that translates to profit without the recipient having to expend time or money in return

  2.  

    •     payable under an obligation

  3.  

    •     recurring in nature, although the frequency does not need to be on an annual basis

  4.  

    •     income in the hands of the recipient, such that some capital payments may be treated as annual payments if they represent a payment that is not a simple discharge of a capital

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