On or about 19 Mar 2021, the Inland Revenue Authority of Singapore (IRAS) has published a revised edition of the IRAS e-Tax Guide on
Tax Treatment On Donations With Benefits (Donations made before 19 Mar 2021). It replaces the first edition published on 1 May 2006.
This e-Tax Guide sets out the concessionary tax treatment applicable for donations with certain types of benefits, where the donations are made before 19 March 2021.
Current Tax Treatment
Under sec 37(3) of the Income Tax Act, a double tax deduction in respect of certain donations is granted. However, where the donor receives a benefit in return for the donation made, the tax deduction is only granted on the difference between the donation and the cost of benefit.
Similarly, for GST purpose, a donation is not subject to GST where the recipient of donation does not provide any benefit to the donor in return for the donation. Where the recipient of donation provides some benefits to the donor in return for a donation, all or part of the donation is considered to be payment in return for goods or services. GST is to be accounted by the recipient of donation on such consideration if the recipient of donation is GST-registered.
Concessionary Tax Treatment – Donations with Certain Benefits
As a concession, certain donations made to registered charities and institutions of a public character is deemed to be pure donations notwithstanding there is a benefit given in return for the donation. To qualify for the concessionary tax treatment, donations with benefits given in return will be regarded as pure donations if the benefits are treated as having no commercial value. Benefits are treated as having no commercial value if the following conditions are met:
- the benefit is given in acknowledgement of the donation; and
- the benefit has no resale value.
Examples include ticket to attend charity dinners or charity shows, complimentary tickets to Singapore Zoo, Golf game for donor, and souvenir or gift (e.g., plaques, commemorative books, CDs, goodie bags,etc).
Source: IRAS, 22 Mar 2021