View the list of IPCs.
The Business & IPC Partnership Scheme (BIPS) has been renamed to the Corporate Volunteer Scheme (CVS) with effect from 1 Apr 2023.
Who Can Qualify
All businesses carrying out a trade or business in Singapore are eligible for CVS when their employees* volunteer, provide services or are seconded to IPCs.
[NEW!] With effect from 1 Jan 2024, the scope of qualifying volunteering activities will be expanded to include activities which are conducted virtually (e.g. online mentoring and tuition support for youths/ children) or outside of the IPCs’ premises (e.g. refurbishment of rental flats) as announced in Budget 2023. Volunteering projects have to be mutually agreed between the IPC and the business.
Businesses that are eligible for CVS are:
- Companies, sole proprietorships, partnerships (including limited partnerships and limited liability partnerships) and registered business trusts; and
- Bodies of persons, e.g. clubs and trade associations, that are deemed to be carrying on a business.
* Exclude owners of businesses i.e. sole-proprietors, partners and shareholders who are also directors of the company.
[UPDATED!] To continue supporting corporate volunteerism, it was announced in Budget 2023 that the CVS will be extended for another 3 years, until 31 Dec 2026.
Qualifying expenditure includes:
- Basic wages
- Other related expenses incurred by the business that were necessary for the provision of services to IPC
All qualifying expenditure must meet the following requirements:
- Not reimbursed by the IPCs at anytime;
- Incurred only because of the volunteering services;
- Not considered as personal, living, or family expenses; and
- Not capital expenditure.
For ease of claiming CVS tax deduction, the following enhancements have been made. From 2 Dec 2019, businesses are allowed:
- Tax deduction on wage of part-time employees who volunteer with IPCs under CVS; and
- An option for businesses to claim tax deduction on wage expenditure based on fixed hourly rates in lieu of actual salary: at $10 per hour for general volunteering and $20 per hour for skills-based volunteering. Skills-based volunteering refers to services which necessitate a qualifying employee to apply work-related expertise, as required by the IPC.
Businesses will in total receive a 250% tax deduction on the qualifying expenditure incurred, subject to the receiving IPC's agreement.
|Qualifying Expenditure||Tax Deduction Given|
|Currently deductible under Section 14(1) of the Income Tax Act 1947|
|Currently not deductible under Section 14(1) of the Income Tax Act 1947|
The qualifying expenditure is subject to a cap of $250,000 per business per Year of Assessment (YA). A qualifying expenditure cap of $50,000 is also imposed on each IPC per calendar year.
[NEW!] As announced in Budget 2023, the qualifying expenditure cap of $50,000 for each IPC per calendar year will be increased to $100,000 from 1 Jan 2024. The qualifying expenditure cap remains at $250,000 per business per YA.
Company A (with a 31 Dec financial year end) sends its employees to provide volunteering services to IPC X and IPC Y. Assuming that the expenditures do not qualify for Section 14(1) deduction, the following tables illustrate the application of the relevant expenditure caps:
Qualifying expenditure incurred before 1 Jan 2024
|IPC||Expenditure incurred||Qualifying expenditure for CVS incurred in 2020||Tax deduction granted|
$40,000 x 250% = $100,000
$50,000 x 250% = $125,000
* The qualifying deduction is capped at $50,000 per IPC per calendar year before 1 Jan 2024.
# Due to the $50,000 cap imposed on each IPC per calendar year before 1 Jan 2024, no tax deduction under CVS will be given to other businesses that provide volunteering services to IPC Y in 2020. A further tax deduction of $10,000 ($50,000 - $40,000) under CVS can be given on qualifying expenditure incurred by other businesses that provide volunteering services to IPC X in 2020.
^ As the qualifying expenditure is capped at $250,000 per business per YA, Company A can claim another $160,000 ($250,000 - $90,000) in qualifying expenditure under CVS in YA 2021.
Qualifying expenditure incurred from 1 Jan 2024 to 31 Dec 2026
|IPC||Expenditure incurred||Qualifying expenditure for CVS incurred in 2024||Tax deduction granted|
$40,000 x 250% = $100,000
|Y b||$120,000||$100,000 a|
$100,000 x 250% = $250,000
a The qualifying deduction is capped at $100,000 per IPC per calendar year from 1 Jan 2024 to 31 Dec 2026.
b Due to the $100,000 cap imposed on each IPC per calendar year from 1 Jan 2024 to 31 Dec 2026, no tax deduction under CVS will be given to other businesses that provide volunteering services to IPC Y in 2024. A further tax deduction of $60,000 ($100,000 - $40,000) under CVS can be given on qualifying expenditure incurred by other businesses that provide volunteering services to IPC X in 2024.
c As the qualifying expenditure is capped at $250,000 per business per YA, Company A can claim another $110,000 ($250,000 - $140,000) in qualifying expenditure under CVS in YA 2025.
How to claim CVS
Before provision of service - Agreement on the scope of service
Business and IPC should agree on the type and duration of volunteering service, as well as the estimated expenditure, before the business provides the service, taking into account the respective expenditure caps applicable to the business and the IPC. Thereafter, the business is to download and complete the BIPS Service Giving Form A and Declaration for the IPC’s endorsement.
After provision of services - Submission
After the business carries out its volunteering service, it shall seek the IPC’s endorsement on the completed BIPS Service Giving Form B with the actual expenditure. Thereafter, the IPC can submit the endorsed Form A, Declaration and Form B electronically to IRAS via mytax.iras.gov.sg using the BIPS Service Giving Declaration Form Submission digital service by the end of January of the following year.
From 2 Dec 2019, businesses need not submit documentation proof for the IPCs’ verification for related expenses that make up less than 5% of the total qualifying expenditure for that volunteering project. However, businesses should retain documentation for usual record-keeping purpose and for verification by IRAS for tax claims.
Claim in Tax Computation
Businesses can claim CVS tax deduction in its tax computation based on the amount endorsed by the IPC in the Form B when submitting its income tax return.
For more information or enquiries on CVS, refer to the National Volunteer & Philanthropy Centre’s (NVPC) website or email NVPC at: [email protected].
Do non-resident businesses qualify for CVS?
As CVS aims to encourage employers to give back to society, there is no requirement that the qualifying business must be a tax resident in Singapore. However, the qualifying business must be carrying on a trade or business in Singapore.
Non-resident businesses which are subject to final withholding tax will not qualify for CVS as they are currently taxed at reduced final withholding tax rates on gross income, and not on net income.
Do investment holding companies qualify for CVS?
Investment holding companies do not qualify for CVS as they derive only passive income such as dividend, interest or rental, and are not regarded to be carrying on a trade or business for tax purposes.
Do trusts qualify for CVS?
Trusts are generally used as passive investment vehicles with no active business operations. Hence, they do not qualify for CVS. However, a Registered Business Trust, which is treated as a company for tax purposes, qualifies for CVS.
Do service companies qualify for CVS?
Service companies render services to/ on behalf of their related companies.
Service companies that derive arm's length fees will qualify for CVS if they prepare their tax computations under the normal tax rules. If a service company elects to use the cost plus mark-up basis of assessment, the company will not qualify for CVS. This is because an acceptance of mark-up as the chargeable income of the company is net of all available deductions and allowances (including CVS).
What are qualifying wages?
Qualifying wages consist of basic wages, including the monthly variable component but excluding employer's contributions to CPF, bonuses, benefits-in-kind, allowances and other components of wage costs.
When are qualifying wages considered to be wages for time spent volunteering?
Only wages for the time spent volunteering during working hours at the IPC's premises will qualify for CVS. For volunteering events which are provided outside the IPC's premise, only wages for time spent at the volunteering event will qualify for CVS.
Wages for time spent preparing for and spent travelling to and fro for the volunteering event will not qualify for CVS.
How do we allocate monthly wages to the time spent in volunteering?
Any reasonable apportionment method is acceptable (e.g. to apportion using the number of working days or working hours spent performing the service for the IPC or on secondment with the IPC.)
From 2 Dec 2019, businesses are given an option to claim tax deduction on wage expenditure based on fixed hourly rates in lieu of actual salary: at $10 per hour for general volunteering and $20 per hour for skills-based volunteering.
Can salary expenditure incurred for services that fall outside of employees’ working hours qualify for CVS?
No, expenditure incurred as a form of overtime pay is not allowed under CVS. However, if time off in lieu is given to the employee for the period during which services are provided outside working hours instead of overtime pay, the salary expenditure can be prorated and allowed accordingly.
Can donation of goods qualify for CVS? If so, how should the deduction be computed?
A pure donation of goods will not qualify for CVS. 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 CVS.
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 CVS. 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.
In the case where the company supplies toys that it manufactures for the party, it has appropriated its trading stock for a non-trade purpose. Under Section 10J of the Income Tax Act 1947, the open market value of the toys supplied for the party as at the date of appropriation is treated as the company's income from its trade or business for the YA relating to the basis period in which the trading stocks were appropriated. The company is required to report its appropriation of trading stocks for a non-trade purpose to the Comptroller of Income Tax in the AC Reporting Form (PDF, 115KB) at the point of filing its tax return.
Can expenditure incurred on food consumed, decorations and goodie bags provided during an event in the course of volunteering qualify for CVS?
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 volunteering services.
Can expenditure incurred on transport provided during an event in the course of volunteering qualify for CVS?
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 volunteering 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 1947.
Can expenditure incurred to reimburse employees for transport to and fro the IPC in the course of volunteering qualify for CVS?
No, expenditure incurred to reimburse the employees to travel from his/ her home to the IPC premises and vice versa does not qualify for CVS as it is considered as a personal expense of the employee.
Can expenditure incurred by a business for sending employees to perform volunteering services overseas for a local IPC qualify for CVS?
No, expenditure incurred by a business for sending its employees to perform volunteering services overseas for a local IPC does not qualify for CVS as CVS is intended to support local volunteer activities only.
Are we able to claim CVS benefits on expenditure incurred to engage external vendors to provide services in the course of providing the volunteering services (e.g. engagement of musicians to liven up the atmosphere of the fun fair organised for IPC)?
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 CVS.
Are we able to claim CVS benefits on actual expenditure which may be higher than the market rate (e.g. the company pays $20 per hour for packing services instead of market rate of $12 per hour)?
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 CVS.
Application of business cap
In the case of a sole-proprietor who owns multiple businesses, how will the expenditure cap of $250,000 per YA be applied?
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.
In the case of a partnership, how will the expenditure cap of $250,000 per YA be applied?
Secondment of employees
What is considered as a secondment under CVS?
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.
Types of services performed
Can CVS tax deductions which cannot be fully utilised be carried forward, carried back, or transferred via Group Relief?
As per existing tax treatment for business expenses, any unutilised tax deductions from CVS 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.
If my business is taxable at the prevailing rate and concessionary rate, how will the tax deduction under CVS be allowed on qualifying expenditure in relation to income streams taxed at different tax rates?
Qualifying expenditure for CVS are considered to be common expenses to be apportioned to each income stream using an appropriate basis (e.g. turnover basis).
What are the GST implications for expenses incurred in the course of volunteering?
Under the GST Act 1993, 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.
Interaction with other schemes
Abuse of CVS
What is the penalty for abusing CVS?
IRAS takes a serious view of any non-compliance or abuse of CVS.
Offenders who are convicted of fraudulent tax deductions under CVS can face penalties of up to 400% of the amount of tax undercharged; a fine not exceeding $50,000; and/or imprisonment.