Receiving Donation and Sponsorship

Outright donations, with no benefits given to the donor, are not subject to GST.

Donations

Donations are however subject to GST when the recipient of the donation has done something that benefits the donor in order to receive the donation i.e. a supply took place.

Determining if GST Applies

No Supply

Donation (No supply)

When the recipient does not provide any benefit in return to the donor, there is no supply to the donor. Thus, GST is not applicable.

Supply Exists

Donation (with supply)

When the recipient provides benefits in return to the donor in the form of goods or services, there is a supply to the donor. Thus, GST is applicable.

Accounting for GST on Benefits

The recipient has 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, the recipient should account for GST at tax fraction (e.g. 7/107) on the donation amount.

Donations to Registered Charities & Institutions of a Public Character (IPC)

Notwithstanding there are benefits given in return for the donations, certain donations to registered charities or IPC are deemed to be pure donations. These recipients need not account for GST on such donations.

To be regarded as donations under the concessionary tax treatment, the benefits are treated as having no commercial value if the following conditions are met:

  1. The benefit is given in acknowledgement of the donation; and
  2. The benefit has no resale value.

When registered charities and IPC hold charity dinners, charity concerts/shows or charity golf tournaments, the funds raised from these events are deemed as pure donations.

Common Forms of Donation and Fund Raising Activities

Recipient has to account for GST at tax fraction (e.g. 7/107) on the gross donations received after deduction of the cash payout to the lucky draw winner.

As no rewards are given to donors, GST is not chargeable on the donations received.

The recipient has to account for GST at tax fraction (e.g. 7/107) on the amount of funds raised through ticket sales less cash payout. If non-cash prizes are given, the recipient cannot deduct the value of such prizes from the funds raised.

Recipient has to account for GST at the prevailing tax rate on the market price of the auctioned item. If the amount paid is higher than market price, the difference represents donation and is not subject to GST.

Recipient has to account for GST on the price of the advertising space.

For fund raising activities where flags containing logo of the organisation are given as appreciation, such donation is not subject to GST.

GST is accountable at the prevailing tax rate on the market price of the souvenirs given.

No GST needs to be accounted for by the registered charity and IPC if the souvenirs are not sold commercially (e.g. bearing small logos of organiser, fund raising messages or made particularly for the event and not for market sale).

GST is accountable at the prevailing tax rate on the open market value of the benefits given.

The following fund-raising events organized by registered charities and IPC with benefits given to the donor are deemed as pure donations:

  • Charity dinners where the donation includes ticket to attend dinner;
  • Charity shows where the donation includes ticket to attend show;
  • Complimentary tickets (e.g. entry to Singapore Zoo); and
  • Golf tournament where donation includes golf games for the donor.

For more information, please refer to IRAS circular Tax Treatment on Donations with Benefits (106KB).

Sponsorship

Sponsorship refers to the support, either financial or in the form of goods and services, given by businesses or members of public.

Determining if GST Applies

Determine if GST applies

To ascertain whether any sponsorship received attracts GST, you need to determine whether a supply exists for GST to be chargeable on.

Generally, a supply exists when the recipient has done something for the sponsor in return for the sponsorship (monetary or non-monetary form) received.

Accounting for GST on Benefits

Sponsorship with no benefits provided by recipient

Sponsorship received in monetary or non-monetary form by the recipient does not attract GST if the sponsor:

  1. Provides the support voluntarily with no obligations; and
  2. Does not receive any tangible benefits in return (e.g. recipient merely provide an acknowledgement of the sponsor's contribution).
Sponsorship in cash

No GST needs to be accounted by the recipient of the cash sponsorship.

Sponsorship in kind

For sponsorship in the form of goods where no tangible benefits are provided by the recipient in return, the sponsor is required to account for deemed output tax on the goods sponsored if :-

  1. the total cost of goods sponsored is more than $200; and
  2. the sponsor has claimed input tax on the sponsored goods. 

For sponsorship in the form of services where no tangible benefits are provided by the recipient in return, the sponsor is not required to account for deemed output tax on the services.

The recipient of the above sponsored goods or services does not have to account for output tax since it does not provide any benefit to the sponsor (i.e. no supply).

Sponsorship with benefits provided by recipient

Sponsorship in cash
If the sponsor's cash contributions are made on certain conditions, based on verbal or written agreements, and these conditions confer benefits on the sponsor, the recipient is treated as making a supply to the sponsor.

The recipient (e.g. charity) has to account for output tax at the prevailing tax rate on the open market value (OMV) of the benefits it provides. If the OMV of the benefits is lesser than total sum sponsored, the difference is considered as the non-taxable donations. However, if the OMV is not available, the recipient should account for GST at tax fraction (e.g. 7/107) on the cash received.

Sponsorship in kind
For sponsorship in the form of goods or services where tangible benefits are provided by the recipient in return, the sponsor is required to account for GST at the prevailing tax rate on the OMV of the goods or services it provides.

The recipient of the sponsorship will have to account for GST at the prevailing tax rate on the OMV of the benefits it provides. If the OMV of the benefits cannot be determined, the recipient should account for GST on OMV of the sponsored goods or services.

  • I am in charge of organising a food festival. Customers of participating outlets get a chance to win a car. A third party sponsors the car. In return for the prize, I provide an advertising banner for the car sponsor. Do I have to account for GST?

    Yes, you have to account for GST on the advertising services you provide to the sponsor. The value is based on the open market value of the advertising services. The sponsor has to account for GST on the car if he is GST-registered.
  • How do I account for GST (output tax) on gifts?

    Please refer to our webpage on Gift and sample .
  • I am a organising a charity show where donors can call our hotline to donate. Are the administrative fees imposed by my telephone operator subject to GST?

    For each call or SMS message to a specific hotline to make donation, the service provider (separate from the charity) may impose an administrative fee for the service rendered.

    If the service provider is a GST-registered person, the administrative fee is subject to GST. This is similar to other local telephone call charges.

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