Income Tax Act 2007 section 809ZK

Circumstances in which financial advantage deemed to be obtained

Section 809ZK sets out the circumstances in which a person connected with a charity donation is deemed to have obtained a financial advantage, for the purposes of the tainted donations rules.

• Where a transaction between a linked person (X) and another party (Y) is on terms more favourable to X, or less favourable to Y, than arm's length terms, X is deemed to have obtained a financial advantage from the charity or a connected charity.
• A financial advantage also arises if the transaction is not one that a person dealing at arm's length in Y's position would reasonably be expected to enter into at all.
• These deemed circumstances are not exhaustive — other situations may also constitute a financial advantage under the tainted donations rules.
• Transactions covered include property sales or lettings, provision of services, property exchanges, loans or other financial assistance, and business investments.