½Û×ÓÊÓƵ

Benevolent gifts by traders

In general, the cost of business entertainment and gifts is not an admissible deduction for tax purposes¹ (see B2.432). However, this restriction is removed² in the case of business donations to registered charities, provided the deduction would otherwise be allowable. Other expenditure on gifts does not fall within the restriction provided that:

1. Ìý

   •ÌýÌýÌýÌý it is wholly and exclusively incurred for the purposes of the trade

2. Ìý

   •ÌýÌýÌýÌý the gift is made for the benefit of a body or association of persons established for educational, cultural, religious, recreational or benevolent purposes, and the body or association is:

3. 1. Ìý

      –ÌýÌýÌýÌý local in relation to the donor's business activities, and

   2. Ìý

      –ÌýÌýÌýÌý not restricted to persons connected with the donor

4. Ìý

   •ÌýÌýÌýÌý the expenditure is reasonably small in relation to the scale of the donor's business

The payment of an ordinary annual subscription to a local trade association by a non-member is similarly not regarded as a gift provided it is incurred