Requirement to Register for GST
Charities and non-profit organisations are required to register for GST if
- the value of their taxable supplies exceeds S$1 million at the end of the calendar year; or
- at any point in time, the value of their taxable supplies is expected to exceed S$1 million in the next 12 months.
This is even if they are engaged mostly in non-business activities.
For more information on GST registration, please refer to ‘Do I need to register for GST’.
Receiving Grants, Donations & Sponsorships
When you receive grants, donations and sponsorships freely from the givers, and do not provide direct 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 sponsorships).
However, when you provide direct benefits in return to the giver of grants, donations and sponsorships, 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 (8/108) on the money received or at the prevailing tax rate on OMV of goods or services received.
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 benefits are given in connection with a fundraising event; and
- fall within the list of benefits specified in the e-Tax Guide 'Tax Treatment on Donations with Benefits on Donations with Benefits (Donations made on or after 19 Mar 2021)’.
Claiming Input Tax
Input Tax Incurred for Wholly Business Activities
This refers to non-subsidised activities where you charge market rates for your goods and services and these activities are not funded by grants, donations or sponsorships. Input tax incurred for such business activities to make taxable supplies is claimable, subject to the input tax claiming conditions.
Input Tax Incurred for Non-Business 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, such as when you provide services 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.
You may be carrying on both business and non-business activities that will require you to apportion your input tax claims.
This will arise if you provide goods or services in return for a fee that is subsidised by non-business receipts such as grants, donations or sponsorships. Such non-business receipts are usually given to you to fund your operations and support the subsidised activities.
For example, if you are an operator of a nursing home, the government may provide grants to you to subsidise your operating costs so that you could charge lower rates to the low income group. As a result, you will be involved in subsidised activities.
Input tax incurred for subsidised activities is not claimable in full and 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 e-Tax Guide 'GST: Guide for Charities and Non-Profit Organisations'.
[NEW!] Avoid Common Errors made by Charities and Non-Profit Organisations
To help you understand the GST rules and avoid errors commonly made by charities and non-profit organisations (NPOs), please refer to Frequently Asked Questions.
To help you determine whether you have applied the GST rules correctly, you may use the Self-Review Checklist for Charities and VWOs to perform a self-assessment.
If you discover any GST errors, we encourage you to disclose them early for reduced penalties.
I am a charitable organisation. Is the reverse charge applicable to me?
With effect from 1 Jan 2020, GST-registered persons have to apply reverse charge (RC) on imported services if they are not entitled to full input tax recovery. From 1 Jan 2023, RC will also apply to all purchases of imported low-value goods (‘LVG’) (unless the LVG procured is directly attributable to taxable supplies) and includes LVG purchased from local and overseas suppliers, electronic marketplaces or redeliverers, regardless of whether they are GST-registered or not.
If you are a GST-registered charity that is not able to claim input tax in full, RC will apply to you.
If you are currently not GST-registered but you procure imported services or LVG within the scope of RC from overseas suppliers exceeding S$ 1 million for a 12-month period, you will be liable to register for GST by virtue of the RC registration rules. For more information, please refer to the e-tax Guide 'GST: Reverse Charge'.
I am 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.