Business and IPC Partnership Scheme (BIPS)

A pure donation of goods will not qualify for BIPS. If it is necessary for goods to be given to IPCs in the course of volunteering, the expenditure incurred on these goods will qualify for BIPS.

Example
A company sends its employees to organise a Christmas party and incurs cost to purchase toys to be given to beneficiaries as presents. This cost will qualify for BIPs. If this company manufactures toys and supplies its toys for the party, the qualifying amount will be the manufacturing cost and not the selling price of the toys.

In addition, expenditure incurred on goods consumed in the process of volunteering are allowable, as long as there is an accompanying service provided, and all qualifying conditions are met.

Yes, expenditure incurred on food consumed, decorations and goodie bags provided during an event in the course of volunteering are allowable, given that the expenditure was incurred only because of the volunteer services.

Yes, expenditure incurred on transport (e.g. hiring of buses) provided during an event in the course of volunteering are allowable, given that the expenditure was incurred only because of the volunteer services. However, if private cars are used as a mode of transport, these private car expenses have to be excluded as they are disallowed for deduction under section 15 of the Income Tax Act.

No, expenditure incurred to reimburse the employees to travel from his/ her home to the IPC premises and vice versa does not qualify for BIPS as it is considered as a personal expense of the employee.

No, expenditure incurred by a business for sending its employees to perform volunteering services overseas for a local IPC does not qualify for BIPS as BIPS is intended to support local volunteer activities only.

IPCs have the right to determine the expenditure items they wish to endorse as long as the expenditure meet the 4 requirements.

IPCs can also decide to endorse an amount lower than the actual cost incurred by the business if they consider it reasonable, subject to the IPC's entitlement cap. In the event of disagreement, IRAS will allow the deduction based on the amount endorsed by the IPCs.

To avoid uncertainty, the business and IPC should agree upfront on the type of expenditure and estimated expenditure that it wishes to claim under BIPS.

IPCs have the right to endorse any lower amount they consider reasonable, subject to the IPC's entitlement cap. In the event of disagreement, IRAS will allow the deduction based on the amount endorsed by the IPCs. To avoid uncertainty, the business and IPC should agree upfront on the type of expenditure and estimated expenditure that it wishes to claim under BIPS.

The business expenditure cap of $250,000 per YA will be applied at the sole-proprietor level, which means that the expenditure cap is the same regardless of the number of businesses owned by the sole-proprietor.

The business expenditure cap of $250,000 per YA will be applied at the partnership level regardless of the number of partners.

A secondment is a temporary transfer of an employee to work for an IPC over a few days, weeks, months, or years and can be done in an interspersed manner.

No, employees do not have to perform services which are related to the business in order to qualify for BIPS.

For example, an accountant from an accounting firm does not necessarily have to perform accounting services for an IPC.

As per existing tax treatment for business expenses, any unutilised tax deductions from BIPS will form part of the business loss and can be carried forward, carried back, or transferred under the Group Relief system, subject to existing rules.

Qualifying expenditure for BIPS are considered to be common expenses to be apportioned to each income stream using an appropriate basis (e.g. turnover basis).

Under the GST Act, input tax is claimable if it is incurred to make a taxable supply.  A supply exists only when a consideration is received in return for the provision of goods or services. Hence, services performed for free (e.g. volunteering) is not considered a supply.  As for wage expenses incurred in volunteering, there is no GST on them and hence, no input tax claim arises. On the other hand, any GST on incidental expenses incurred in the course of volunteering is not claimable as volunteering is not a taxable supply.

A single Corporate Social Responsibility initiative may benefit from either the matching grant under the Share as One Programme or BIPS, but not both.

IRAS takes a serious view of any non-compliance or abuse of BIPS.    

Offenders who are convicted of fraudulent tax deductions under BIPS can face penalties of up to 400% of the amount of tax undercharged; a fine not exceeding $50,000; and/ or imprisonment.