Charities and non-profit organisations are required to register for GST if their annual taxable supplies exceed S$1 million even if they are engaged mostly in non-business activities.
For more information on GST registration, please refer to Registering for GST.
When you receive grants, donations and sponsorship freely from the givers, and do not provide benefits in return to the givers, the amounts received do not attract GST (i.e. you do not need to account for GST on the grants, donations and sponsorship).
However, when you provide benefits in return to the giver of grants, donations and sponsorship, you are treated as making a supply. You have to account for output tax at the prevailing tax rate on the open market value (OMV) of the benefits.
When the OMV is not available, you should account for GST at tax fraction (e.g. 7/107) on the money received or at the prevailing tax rate on OMV of goods or services received.
For more information and examples, please refer to Receiving grants and Receiving donations and sponsorship.
Donations to Registered Charities or Institutions of a Public Character (IPC)
Certain donations to registered charities or IPC are deemed to be pure donations even when there is a benefit given in return for the donations. The recipient of the donations need not account for GST.
To qualify for the concessionary tax treatment, the benefits must be treated as having no commercial value. The following conditions must be met:
- The benefit is given in acknowledgement of the donation; and
- The benefit has no resale value.
Input Tax Incurred for Wholly Business Activities
Input tax incurred for business activities to make taxable supplies is claimable, subject to the input tax claiming conditions.
Input Tax Incurred for Non-Business Activities
Free Activities
Non-business activities are generally activities of philanthropic, religious, political or patriotic nature for the public domain.
Input tax incurred for non-business activities provided for free is not claimable.
For example, you may incur input tax for the provision of free talks or free medical services that benefit the public. Such input tax is not claimable.
Subsidised Activities
You may perform activities that consist of business and non-business elements.
For example, you organise a public performance for philanthropic purpose and charge the attendee a nominal fee. In this case, the business element refers to the nominal fee charged. The non-business element refers to the subsidised part of the fee (i.e. not borne by the attendee) that is funded by non-business receipts such as outright donations and grants.
Input tax incurred for subsidised activities which consist of business and non-business elements, has to be apportioned.
*Non-business income comprises non-taxable receipts of donations, sponsorships and grants that fund the activities.
If you face difficulties in attributing the input tax incurred for the various activities (wholly business activities, free activities and subsidised activities) a simpler basis of apportionment is allowed. For details, please refer to GST Guide for Charities and Non-profit Organisations (349KB).