Finance Act, 1973

Business entertainment expenses.

24.—(1) Section 61 (a) of the Income Tax Act, 1967 , shall as respects expenses incurred in providing business entertainment have effect as if “wholly, exclusively and necessarily” were substituted for “wholly and exclusively”.

(2) Expenses incurred in providing business entertainment shall not, except to the extent that they are wholly, exclusively and necessarily laid out or expended for the purposes of a business, be included in computing any expenses of management in respect of which relief may be claimed under section 214 (1) of the Income Tax Act, 1967 .

(3) For the purposes of section 241, Chapter III of Part XIV, Chapters I and III of Part XV and Chapters II and V of Part XVI of the Income Tax Act, 1967 , and section 22 of the Finance Act, 1971 , the use of any asset for providing business entertainment shall, except to the extent that the asset is used for providing business entertainment the expenses incurred in the provision of which are wholly, exclusively and necessarily laid out or expended for the purposes of a trade, be treated as use otherwise than for the purposes of a trade.

(4) The expenses to which subsection (1) applies include, in the case of any person, any sum paid by him to, or on behalf of, or placed by him at the disposal of, a member of his staff for the purpose of defraying expenses incurred or to be incurred by him in providing business entertainment.

(5) For the purposes of this section “business entertainment” means entertainment (including hospitality of any kind) provided by a person, or by a member of his staff, in connection with a trade carried on by that person, but does not include anything provided by him for bona fide members of his staff unless its provision for them is incidental to its provision also for others.

(6) This section shall apply in relation to the provision of a gift as it applies in relation to the provision of entertainment.

(7) In this section—

a reference to expenses incurred in, or to the use of an asset for, providing entertainment includes a reference to expenses incurred in, or to the use of an asset for, providing anything incidental thereto;

a reference to a trade includes a reference to a business or profession;

a reference to the members of a person's staff is a reference to persons employed by that person, directors of a company or persons engaged in the management thereof being for this purpose deemed to be persons employed by it.

(8) Subsections (1) and (2) shall apply to expenses incurred on or after the 16th day of May, 1973, and subsection (3) shall apply to use on or after that date.