Singapore: Tax treatment of charitable donations when benefits received by donor

Tax treatment of cash donations made on or after 19 March 2021

Tax treatment of cash donations made on or after 19 March 2021

The Inland Revenue Authority of Singapore (IRAS) released guidance concerning the tax treatment of cash donations made to charities when the donor receives certain benefits in return.

The guidance—an “e-Tax guide” title the Tax Treatment on Donations with Benefits (Donations made on or after 19 March 2021)—describes the tax treatment of cash donations made on or after 19 March 2021, when there are certain benefits received in return from institutions of public character or a registered charity.

In general, a tax deduction of 2.5 times donations made to eligible charities is available; however, if the donor receives a benefit in return for the donation made to a charity, then the deduction is limited to the difference between the donation and the value of benefit received. Also, the charity must account for goods and services tax (GST).

To encourage philanthropic giving and to ease compliance, the IRAS has (since 2006) applied an “administrative concession” that allows the donor a full tax deduction and also waives the requirement for the recipient to account for GST, when such donations-with-benefits are received in connection with a fundraising activity and are deemed to have no commercial value (such as charity gala dinners, shows, golf tournaments, complimentary tickets, and not-for-sale souvenirs or gifts.

The IRAS also has extended the current administrative concession to “lucky draws” (raffles) held as part of fund-raising events, effective from 19 March 2021. However, this relief does not apply to standalone lucky draws that are not part a fundraising event.

Read a May 2021 report [PDF 488 KB] prepared by the KPMG member firm in Singapore



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