Charities and non-profit organisations may receive donations to fund their operations.
Donations will be subject to GST when the recipient of the donation provides direct benefits to the donor in order to receive the donation i.e. a supply took place.
Determining if GST Applies
Where the recipient does not provide any benefit in return to the donor, there is no supply made to the donor. Thus, the donation does not attract GST. However, the donation will be regarded as "non-business receipts" and may affect your input tax claimable.
For more information on input tax claiming rules, please refer to e-Tax Guide GST: Guide For Charities and Non-profit Organisations.
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 (7/107) on the donation amount.
Common Forms of Donation and Fund- Raising Activities
The following table explains how the recipient is to determine the output tax accountable for common fund-raising activities.
However, if the recipient is an IPC or registered charity, a concessionary tax treatment is given where no GST needs to be accounted for on specified types of benefits given in return for donations. Please refer to Donations to Registered Charities & Institutions of a Public Character (IPC) for information.
|Fund-raising Activity||GST treatment|
|Charity dinners, concerts / shows, golf tournaments||The recipient has to account for GST at tax fraction (7/107) on the value of the charity dinner, concert / show or golf tournament. If the amount received (e.g. from ticket sales) is more than the value of the event, the difference represents a pure donation and is not subject to GST.|
|Charity Show with Lucky Draw||For lucky draws held as part of a charity show, the recipient has to account for GST at tax fraction (7/107) on the gross donations received where the payout from the lucky draw is in the form of goods or services. If the payout is in cash, recipient has to account for GST at tax fraction (7/107) on the donations received after deduction of the cash payout to the lucky draw winner.|
|Charity Auction||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 a pure donation and is not subject to GST.|
|Souvenirs Given to Donor|
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 recipient if the souvenirs are not sold commercially (e.g. bearing logos of organiser, fund raising messages or made particularly for the event and not for market sale).
|Sale of Lucky Draw Tickets (Standalone lucky draws)||The recipient has to account for GST at tax fraction (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.|
|Advertising Space as Benefit to Donor||The recipient has to account for GST on the price of the advertising space.|
|Advertising Space as Benefit to Donor||For fund raising activities where flags containing logo of the organisation are given as appreciation, such donation is not subject to GST.|
Donations to Registered Charities & Institutions of a Public Character (IPC)
To support philanthropic giving and to ease compliance, IRAS has granted an administrative concession to certain donations with benefits. Such donations to registered charities or IPC are regarded as pure donations and these recipients need not account for GST.
To apply the concessionary tax treatment on such donations, the benefits are treated as having no commercial value and this is only if the following conditions are met:
- The benefits are given out in connection with a fundraising event; and
The benefits given in return for the donation must fall within the list of benefits specified below
- Charity gala dinner;
- Charity show;
- Golf tournament;
- Not-intended-for-resale complimentary tickets; and
- Souvenir or gift which is not sold commercially and meets certain conditions.
For more information, please refer to the e-Tax Guide 'Tax Treatment on Donations with Benefits (Donations made on or after 19 March 2021)’
For the tax treatment before 19 Mar 2021, please refer to the e-Tax Guide ‘Tax Treatment on Donations with Benefits (Donations made before 19 March 2021)’
Sponsorship refers to financial support or support in the form of goods and services given by third parties.
Determining 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:
- Provides the support voluntarily with no obligations imposed on the recipient; and
- Does not receive any tangible benefits in return (e.g. recipient merely provides an acknowledgement of the sponsor's contribution).
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 :-
- the total cost of goods sponsored is more than $200; and
- 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 pure donations and no GST needs to be accounted on this amount. However, if the OMV is not available, the recipient should account for GST at tax fraction (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 GST implications are as follows:
(i) Recipient of sponsorship: The recipient will have to account for GST at the prevailing tax rate on the OMV of the benefits it provided to the sponsor. If the OMV of the benefits cannot be determined, the recipient should account for GST on OMV of the sponsored goods or services.
(ii) Sponsor: If the sponsor is GST-registered, it is also required to account for GST at the prevailing tax rate on the OMV of the goods or services it gave to the recipient.
Please refer to the e-tax guide "GST: Guide For Charities and Non-profit Organisations" for the GST rules on sponsorship.
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 telephone operator may impose an administrative fee for the service rendered.
As the telephone operator is a GST-registered person, the administrative fee is subject to GST. This is similar to other local telephone call charges.
I receive non-monetary sponsorships (i.e. in the form of goods and services) where I do not provide any benefits in return. Do I have to treat such sponsorships as non-business receipts to be included in the input tax apportionment formula?
You can exclude non-monetary sponsorships from your input tax apportionment formula. Only grants, pure donations and cash sponsorships received without direct benefits provided to the sponsor would be regarded as non-business receipts to be included in your input tax apportionment formula.