In economics, a transfer payment (or government transfer or simply transfer) is a redistribution of income in the market system.
These payments are considered to be non-exhaustive because they do not directly absorb resources or create output.
Use for administrative: In some federal systems the term can also be used to refer to payments from one order of a government to another; for example in Canada, transfer payments usually refer to a system of payments from the federal government to the provinces.
Major Canadian transfer payments include equalization payments, the Canada Health Transfer and the Canada Social Transfer (formerly the Canada Health and Social Transfer) and Territorial Formula Financing.
Transfer payments are not a part of the national income so they are cut from national income to get n.n.p.
in order to arrive national income such payments are bad debts incurred by banks, payments of pensions, charity, scholarships etc.
In the UK they have several transfer payments such as EMA and a job seeker's allowance.
Limited company contractors who have adopted a strategy of declaring dividends prior to April 2016 but who have not yet paid them out can still attract the dividend tax rates for tax year 2015/16, providing they can provide sufficient evidence to prove it was declared and payable before 6 April 2016.
This is according to Duncan Strike of specialist contractor accountancy firm Intouch, who warns contractors against backdating dividends that can easily be proven wrong.
“Misleading HMRC in any way, shape or form is wholly wrong, and can lead to unintended consequences for the contractor,” he explains.
“The right thing is to consider your financial needs and create an income plan early in the tax year, and then to reassess that prior to 6 April, making any changes in a timely way.
This would negate even the consideration to backdate dividends as you would have made any necessary transactions in time.” Whilst it is quite commonplace for directors of contracting companies to declare a dividend and leave the money within the company, Strike points out that there are no benefits to doing so unless you intend to allow the company to invest those funds.
"It's more of a disadvantage because you're leaving your personal money in the hands of the company," Strike adds.