Sponsor and Tax?

[Harry Potter]

I would like to get some sponsors for me and my partner for the Panorama tour, My idea is to get the sponsor to pay the entry and the four kits designed specific for the sponsor, I would like to know if the sponsor can claim that from tax or how does claimable sponsorship work, or can one even claim your sponsor from tax?

[Skirminkel]

Would really like to see a reply form someone who knows.

 

Bump

[Ha Ha Kieran]

I will find out for you this evening My dad's an accountant specialising in tax and this sort ot thing

[AdrianDJ]

This can only be a deduction if the company claims it as an advertising expense. if sars queries - the co would have to prove genuine advertising. ie u would have to print logos on shirts etc..

[Skirminkel]

All the accountants are probably working this time of the day, hence no reply. Shame

[Tankman]

Yes, tax can be claimed as Donations tax.

 

I raised funds for a charity last year. Indirectly I also asked people and companies to "sponsor" me for the event, but all the money went directly to the charity. The charity then issues the "sponsor" with a receipt and it is then a valid donation.

 

Donations for individuals up to R100 000 per year.

Donations for corporate entities not considered to be public companies up to R10 000 per year.

[Tankman]

Our scenarios are slightly different, and yours might be seen as advertising.

 

The charity I worked with is a NPO and registered for VAT and all the rest, I am not 100% sure what the requirements would be for you to receive this donation in your personal capacity?

[AdrianDJ]

By the way i am a tax and business planner - the company wouldnt be able to claim it as a donation as u cant give them a s18 certificate(Npo/pbo) would have to be advertising

[AdrianDJ]

the R100 000 is not deductible - its just the amount u are allowed to donate without atracting donations tax!

[Minion]

This can only be a deduction if the company claims it as an advertising expense. if sars queries - the co would have to prove genuine advertising. ie u would have to print logos on shirts etc..

If the a company gives me sponsored kit and pays for my entries etc., do I have to declare those as income/perks?

[Tankman]

the R100 000 is not deductible - its just the amount u are allowed to donate without atracting donations tax!

 

ja man, that is what i meant! exempt!

[MariusL]

If the a company gives me sponsored kit and pays for my entries etc., do I have to declare those as income/perks?

 

Only if you do it for a living...

[Harry Potter]

Thanks guys, the kit will be the company name, logo and colors. The amount is not big, +- R5000.00

 

I thought it might be easier to tell the company that he can claim it from tax.

[Eugene]

The company providing you with the sponsorship will undoubtedly be able to deduct the expense as advertising is in the production of their income (your post does say that you will be wearing kit with their logo).

 

The question is, are you liable to declare this income to SARS and will you have to pay income tax on the amount?

 

I am pretty sure that you will. The income tax definition of “gross income” clearly states “the total amount, in cash or otherwise received by or accrued to in favour of………….”

 

Therefore, in terms of this definition, the income that you receive in terms of this sponsorship is taxable unless it is specifically exempted from tax.

 

Section 10 of the Income Tax Act provides for income that is exempt from tax and your scenario is not mentioned at all in this section.

 

Also, bear in mind that you will be able to deduct, as an expense against this income, related costs that you have incurred (travel, cost to make the clothing, entry fees etc). In your senario, I'm pretty sure that your expenses will equal your income, so your net taxable income will be nil.

 

I have searched our data base at work, but cannot find anything on this topic. A colleague has indicated that she knows of a publication, she will look tomorrow and I will be able to give you a more definite answer.

[Tankman]

Tax and the loopholes are always interesting.

 

His question:

 

If the a company gives me sponsored kit and pays for my entries etc., do I have to declare those as income/perks?

 

In this case no, because the company will be paying the entry fees directly to the organizers and not to you. They are not going to be handing you a whack of cash are they? What the company does with their money has nothing to do with your personal income tax unless they give the money directly to you. (I doubt that there are many companies that would give the funds directly to you ... unless you work in government and have shares in the company of course)

[henry newbi]

Does anyone have a precise answer on this matter?