Income Tax Act 2007 section 525

Meaning of "charitable trade"

Section 525 defines when a trade carried on by a charitable trust qualifies as a "charitable trade" for the purposes of the tax exemptions available to charities.

• A trade is charitable if it is carried out as part of the trust's primary purpose, or if the work is mainly done by the trust's beneficiaries, throughout the relevant basis period
• Where a trade only partly fulfils either of these conditions, the qualifying and non-qualifying parts are treated as separate trades
• When a trade is split into separate parts, expenses, receipts, adjustment income and post-cessation receipts must be divided on a just and reasonable basis
• Both conditions — primary purpose and beneficiary work — are assessed over the entire basis period for the tax year in question