Income Tax Act 2007 section 543

Meaning of "non-charitable expenditure"

Section 543 defines what counts as "non-charitable expenditure" for a charitable trust in a given tax year, covering trading losses, non-charitable spending, unapproved investments, and unapproved loans.

• Trading losses are treated as non-charitable expenditure unless the trade is a charitable trade or qualifies for specific small-scale, fundraising, or lottery exemptions
• Expenditure not incurred for charitable purposes only — including post-cessation payments, losses on land-related activities not qualifying for property income exemptions, and losses on non-charitable miscellaneous transactions — is non-charitable expenditure
• Funds invested in unapproved investments or lent as unapproved loans during the tax year are also classified as non-charitable expenditure
• Where an item falls within more than one category it is only counted once, and additional amounts may be treated as non-charitable expenditure of earlier years under the excess expenditure rules