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Tax change for trading stock donations

May 9, 2023

Two new sections were put into the Tax Act as a result of Covid-19. 

Until that time, if a business donated its trading stock to a charity it had to treat the donation as a sale at market value. 

These new sections were due to expire on 31 March 2023. That date has now been extended to 31 March next year.

If a business donates some of its trading stock to a registered charity or a public authority, it can claim the cost of the trading stock as an expense so long as this is done by 31 March 2024.

Where a business donates trading stock to an entity other than a charity or public authority, there is still no deemed market disposal. 

This is provided the person who receives the goods is not associated with the donor. However, the cost of the trading stock will not be tax-deductible.

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