Apparently a company who wants to sponsor a driver can get the sponsorship money removed as a “Tax Deductible”. Anyone know anything about that? Sounds like Legal money laundering.
You usually have to prove there’s some kind of benefit to the business. It’s a marketing expense basically. Also not sure how this compares to money laundering.
Yea sorry, the money laundering was incorrect translation from my part. English isn’t my first language. Can you explain what goes through to prove its a benefit? Also what is a marketing expense?
Well, that would depend on the country where the business is. In the UK there’s a relatively high bar to prove it’s an allowable expense. That means you have to prove is wholly commercial in nature, not just helping mates or friends.
As said above, tax law varies wildly by country. As far as “does this seem right”? - absolutely. As long as it is a proper sponsorship, it is a marketing expense and therefore reduces the companies profit for the year.
I think the real question is how does sponsoring your kart racing benefit their business. If it doesn’t it probably is not a legitimate taxable expense for a company.
Years ago I knew someone racing dirt cars. He put together a full proposal for a dairy product company. He ultimately showed how advertising on his car/trailer gave them more value than on a billboard or radio ad. He ended up with something like $40k a year sponsorship for several years, 20 years ago.
It was a lot of research for the driver. It included him showing his car at grocery store openings and some other events. That meant he always had a second car show ready. He had the benefit that he raced at events that had 1000 plus paying spectators.
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