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Deductions for Sponsorship
The ATO issued an interpretative decision (ID) on deductions and expenses: sponsorship of motorcycle racing (ATO ID 2005/284).
In this case, the taxpayer operated a business and intended to sponsor motorcycle racing to gain exposure from the sponsorship in the form of advertising to benefit his business.
The ATO’s summary was as follows:
The taxpayer was entitled to claim a deduction for sponsoring the motorcycle racing because the arising exposure would benefit his business in the form of advertising. In this case, the advertising included having the taxpayer’s business name on the motorcycles, a support vehicle as well as the clothing and caps worn by the riders.
It is the taxpayer who determines the nature of the expenditure to be undertaken in conducting their business (Snowden & Wilson’s case).
Advertising in the form of sponsorship directed to enhance the income producing activities of the business are deductible under Section 8-1 of the Income Tax Assessment Act (ITAA) 1997.
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