As our local summer sports are starting to wind up and the winter sports start ramping up, local sporting clubs may approach your business during the year asking for sponsorship and/or donations.
The question some of you may ask – is sponsorship and/or donations a tax deduction?
Donations are not a tax deduction unless the sporting club is registered as a deductible gift recipient (DGR), and most sporting clubs cannot be a DGR.
Sponsorship, however is tax deductible.
Sponsorship is the financial or in-kind support of an activity. It is not advertising but it promotes a company in association with the club.
ATO ID 2005/284 deals with deductions and expenses in relation to sponsorship.
If a taxpayer provides sponsorship in the belief that the exposure from that sponsorship will benefit the business in the form of advertising and will generate future income then the expenditure should be deductible. This will be the case even if it turns out that the sponsorship didn’t generate any future income.
So, for example, if a plumbing company sponsored the local netball team with uniforms and equipment, including advertising on the uniforms and at games, that sponsorship would be deductible.