Sponsor and Tax?

[ChrisF]

Do people (thought their businesses) claim VAT on race entries, and get queried?

 

at about R90k that must be close to R14k of VAT for the cape epic.

 

I know people where the business buys the Epic entry .... part of their advertising budget ....  pretty sure they claim VAT back .....

[Longbarn Killer]

Do people (thought their businesses) claim VAT on race entries, and get queried?

 

at about R90k that must be close to R14k of VAT for the cape epic.

Depends on the reason for paying the race entry.

 

If you are a company paying the entry for a pro racer, you could  argue it is advertising and is in the course or furtherance of your business. In which case you could claim.

 

If the business pays for the entry of it's owner or friend or owner's family, you are going to have a tough time trying to convince SARS that it is not entertainment (VAT cannot be claimed on entertainment).

[Pure Savage]

Depends on the reason for paying the race entry.

 

If you are a company paying the entry for a pro racer, you could  argue it is advertising and is in the course or furtherance of your business. In which case you could claim.

 

If the business pays for the entry of it's owner or friend or owner's family, you are going to have a tough time trying to convince SARS that it is not entertainment (VAT cannot be claimed on entertainment).

It will probably just fall under advertising, pictures of kit and some tweets and its pretty easy to claim it. 

 

Same goes for yachts that a company uses to entertain potential clients etc. You just need to keep a log book of all company events and guests on board. 

 

In terms of receiving sponsorship money, add to taxable income, but then you can claim everything required to fulfill the sponsorship, bikes, cars, petrol, kit, cellphone, race fuel, physio etc.

[Eugene]

It will probably just fall under advertising, pictures of kit and some tweets and its pretty easy to claim it.

 

Same goes for yachts that a company uses to entertain potential clients etc. You just need to keep a log book of all company events and guests on board.

 

In terms of receiving sponsorship money, add to taxable income, but then you can claim everything required to fulfill the sponsorship, bikes, cars, petrol, kit, cellphone, race fuel, physio etc.

We were talking VAT not income tax. A company will never get a VAT claim on a yacht used to entertain clients.

 

There's been age old discussions about this on the VAT front.

 

As mentioned bona fide advertising (ie paying a pros entry) shouldn't be a problem. The issue is Joe Soap paying his entry via his own company or a company paying for their employees to compete. This is borderline entertainment (as defined in VAT legislation and not the ordinary meaning) and SARS will argue as such.

 

If you can argue the advertising part (which you do have valid points) the company is exposing itself to fringe benefit VAT by paying the employee's entry. This will negate any claim they may have had.

[Pure Savage]

We were talking VAT not income tax. A company will never get a VAT claim on a yacht used to entertain clients.

 

There's been age old discussions about this on the VAT front.

 

As mentioned bona fide advertising (ie paying a pros entry) shouldn't be a problem. The issue is Joe Soap paying his entry via his own company or a company paying for their employees to compete. This is borderline entertainment (as defined in VAT legislation and not the ordinary meaning) and SARS will argue as such.

 

If you can argue the advertising part (which you do have valid points) the company is exposing itself to fringe benefit VAT by paying the employee's entry. This will negate any claim they may have had.

Yup, you are correct there. 

[Shebeen]

 The issue is Joe Soap paying his entry via his own company or a company paying for their employees to compete. This is borderline entertainment (as defined in VAT legislation and not the ordinary meaning) and SARS will argue as such.

 

 

exactly. i can imagine it is tempting and I'm sure people have tried it.

I was asking if you know, "a friend" had done this.

 

I know of many people who really do use these types of races for business contacts/relationships or teambuilding - I got no issue with that but it does bring in a potential grey area.

[Eugene]

exactly. i can imagine it is tempting and I'm sure people have tried it.

I was asking if you know, "a friend" had done this.

 

I know of many people who really do use these types of races for business contacts/relationships or teambuilding - I got no issue with that but it does bring in a potential grey area.

Sure, I work for a big 4 firm and we sponsor quite a bit in terms of mounting biking. I think they have realized the potential in it.

 

They also, as a kind of benefit, pay staff entry fees for all sorts of events and give clothing etc to compete in.

 

It's quite refreshing, my previous employer (SARS) would nt even subsidise a Christmas lunch.

[ChrisF]

We were talking VAT not income tax. A company will never get a VAT claim on a yacht used to entertain clients.

 

There's been age old discussions about this on the VAT front.

 

As mentioned bona fide advertising (ie paying a pros entry) shouldn't be a problem. The issue is Joe Soap paying his entry via his own company or a company paying for their employees to compete. This is borderline entertainment (as defined in VAT legislation and not the ordinary meaning) and SARS will argue as such.

 

If you can argue the advertising part (which you do have valid points) the company is exposing itself to fringe benefit VAT by paying the employee's entry. This will negate any claim they may have had.

 

Aaaaaa, always wondered why they "invited" outside people into their team .....