Tax incentives for company donations and sponsorship
Did you know that donations made by companies may be eligible for a tax deduction? A tax deduction reduces the amount of income assessable for tax purposes and can be claimed when filing your annual tax return (IR4).
ACAT is an IRD-approved charity and donee organisation, ao companies that donate to ACAT are eligible to claim a tax deduction, providing their claim does not exceed their total annual net income.
We will email you a tax summary download link in early April for all donations made before the end of March each year. To claim your tax deduction, you will need to provide a copy of the summary to the IRD when completing your company’s tax return.
Companies can deduct the total amount of donations as long as it is not more than the company’s net income (as worked out before taking the deduction into account).
For example: ‘Company Ltd’ donates $20,000 to ACAT. Company Ltd’s annual income before tax is $150,000, and its annual expenditure is $50,000, resulting in net income of $100,000. Because Company Ltd’s donation of $20,000 is less than its $100,000 net income, Company Ltd can deduct the full $20,000 from its annual tax return and file for an income of $80,000. This reduces Company Ltd’s tax burden.
Companies that sponsor ACAT may be eligible for a sponsorship tax deduction, providing there is a nexus between the sponsorship and the company’s business or income-earning activity (i.e. climbers are part of your company’s target market). The company also needs to provide evidence of business promotion as a result of the sponsorship to the IRD.
ACAT can help to establish all the necessary requirements to support a sponsorship tax deduction.
Get in touch if you’re interested in donating or sponsoring ACAT.