Question

A business recently decided to sponsor a local baseball team where the company name will be prominately displayed on the front of the jersey.

Is this tax deductible for Businesses in Canada?

Please provide reasoning and a source if possible.

Answer 1

Yes, in canada business promotion activities are legitimate income tax deductions.

Sponsorships of local sports team and even branded charitable donations can be claimed as advertising, but the materials and events need to be directly tied to your brand and logo in way that could conceivable bring more awarness of your brand to public.

You can get deduction for sponsoring banners or uniforms if your company name or logo appears on it.

Remember to be able to justify the public expose you are receiving for the advertising expense, take photos as evidence.

If you are a sole proprietor or partner in a canadian business then you can claim these expenses in T2125 form that you will file with your T1 income tax return. If you are running corporate in canada then claim it on T2 corporate income tax form.