Bodyguard expenses not tax deductible

What is the issue?
A company seeks the High Court’s decision to allow the expenses for the body guards for a director as tax-deductible expenses.

Decision – The High Court ruled that the expenses are not tax-deductible.

On what ground?
The costs of hiring the bodyguard in this case are ruled not wholly and exclusively incurred in the production of income. [Mr Goh Sher Wee’s voice on this line echoes in my empty head.] The company concerned is in the business of exhibiting motion pictures.

How much monies involved?
About $70,000 costs of body guards per annum. So at 20% corporate tax for example, that would translate to $14,000 in tax deductibles per annum. If the expenses were incurred back in 1970s till 2006, the amount involved would be substantial.

What defence has the appellant’s counsel presented?

  • In 1972, there was a kidnap attempt. 4 men with guns. Shot the director in the arm. Director managed to escape.
  • CID recommended that the director be given the necessary protection.

Information I don’t know

  • When were the expenses incurred?
  • What has a 1972’s incident got to do with 2006?
  • What was the motive for attempted kidnap? Was it business-related?

Even if the director is a key man to the company, the company cannot be incurring expenses for director’s personal matters.

In my opinion, there maybe some grounds for appeal if one can prove that the kidnap attempt was a consequence of the director’s action in effecting his duties for the company. The company would then be obliged to act responsibly in return.

Similarly, the President of USA is well protected at the expense of the nation and certain banks may pay for the insurance of credit card debt collection employees.


  1. Insurance against key man risk – if the expense of which is tax-deductible, then why not expenses for bodyguards incurred to protect a key man of the company be tax-deductible too?


  2. The item – insurance expense is incurred in the normal business operations. While protections from attempts to harm a director should not be classified as part of a normal business activity. Is it a normal affair for all directors to be attempted for their life in the course of running a business ? I beg to differ.


  3. Celest,In key man insurance, the company gets a payout upon the demise or incapacitation of their key personnel.In engaging a bodyguard / security guard to protect a company’s key asset or key man, the company is taking positive preventive measure. The man is of no use to the company dead.By the way, are expenses for engaging security guard’s service tax deductible? Hmm.. a new point?


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