Bodies of persons
Under the Income Tax Act 1947, a body of persons refers to any body, corporate or unincorporate, other than a company or partnership. Thus, bodies of persons include:
- Clubs or similar institutions
- Management corporations
- Trade associations
- Town councils
The income of bodies of persons are taxed at 17% (the prevailing corporate income tax rate) from the Year of Assessment 2020.
Tax lifecycle
The chart below shows the key steps in the tax lifecyle for bodies of persons, from preparing financial statements to meeting tax filing and payment obligations.
Follow each step to ensure that your filing and payment obligations are completed on time.
- Keep proper records: Prepare Statement of Accounts after your accounting year ends.
- File annual returns: Submit to relevant authorities (Registry of Societies, Building and Construction Authority) within 1 month of your Annual General Meeting.
- File income tax returns: Submit Form P1 by 15 April of the year after your accounting year ends.
- Pay taxes: Pay within 1 month of receiving your Notice of Assessment.
- Audit: IRAS may conduct audits on income tax filings to ensure tax assessments are correct.
Clubs or similar institutions
A club or similar institution is a not-for-profit association or society formed for social, recreational or leisure purposes. Examples include:
- Sports clubs
- Social clubs
- Hobby groups
- Community organisations
- Recreational societies
Tax treatment for clubs and similar institutions
If you run a club or similar institution in Singapore, your tax treatment depends on how much of your income comes from members versus non-members.
Members are persons entitled to vote at general meetings of the body and exercise effective control over the affairs of the club or similar institution.
| Proportion of gross revenue receipts received from members | Business status | What is taxable |
| 50% or more | Not deemed to be carrying on a business |
|
| Less than 50% | Deemed to be carrying on a business |
|
How to apply the 50% rule for clubs and similar institutions
Examples
| Income and expenditure account of Club ABC | |||
|---|---|---|---|
| $ | $ | ||
| Salaries and Wages | 42,000 | Entrance Fees | 4,000 |
| Administrative expenses | 5,000 | Donations (members) | 10,000 |
| Utilities | 5,000 | Annual subscriptions | 35,000 |
| Property repairs | 8,000 | Sale of D&D tickets: | |
| D&D expenses | 10,000 | Members | 5,000 |
| Non-Members | 7,000 | ||
| Bar & catering | 16,000 | ||
| Rent | 10,000 | ||
| Dividends (gross) | 2,000 | ||
| Surplus | 22,000 | Interest | 3,000 |
| 92,000 | 92,000 | ||
Compare gross receipts between members and non-members to determine if Club ABC is deemed to be trading.
| Comparison of gross revenue receipts from members and non-Members | ||
|---|---|---|
| Receipts | Members (in $) | Non-Members (in $) |
| Entrance fees | 4,000 | 0 |
| Subscriptions | 35,000 | 0 |
| Donations | 10,000 | 0 |
| Sale of D & D tickets | 5,000 | 7,000 |
| Bar & catering | 8,000 | 8,000 |
| (Assume 50/50) | 0 | 0 |
| Rent | 0 | 10,000 |
| Dividends (Gross) | 0 | 2,000 |
| Interest | 0 | 3,000 |
| 62,000 | 30,000 | |
| Percentage | 67.4% (62,000 / 92,000) | 32.6% (30,000 / 92,000) |
Club ABC is not deemed to be carrying on a business because more than 50% of the receipts are from members. But, it will be taxed on the other sources of income derived from dealings with non-members:
| Taxable income of Club ABC | $ |
|---|---|
| Rent | 10,000 |
| Dividends (Gross) | 2,000 |
| Interest | 3,000 |
| Total Chargeable Income | 15,000 |
| Income and expenditure account of Club DEF | |||
|---|---|---|---|
| $ | $ | ||
| Salaries and wages | 42,000 | Entrance fees | 4,000 |
| Administrative expenses | 5,000 | Annual subscriptions | 15,000 |
| Utilities | 5,000 | Sale of D & D tickets: | |
| Repairs | 8,000 | Members | 5,000 |
| Dinner & Dance expenses | 10,000 | Non-Members | 7,000 |
| Rent | 58,000 | ||
| Surplus | 22,000 | Interest | 3,000 |
| 92,000 | 92,000 | ||
Compare receipts between members and non-members to determine if Club DEF is deemed to be trading.
| Comparison of receipts from members and non-members | ||
|---|---|---|
| Receipts | Members | Non-Members |
| $ | $ | |
| Entrance fees | 4,000 | 0 |
| Subscriptions | 15,000 | 0 |
| Sale of D & D tickets | 5,000 | 7,000 |
| Rent | 0 | 58,000 |
| Interest | 0 | 3,000 |
| 24,000 | 68,000 | |
| Percentage | 26.1% (24,000 / 92,000) | 73.9% (68,000 / 92,000) |
Club DEF is deemed to be carrying on a business because more than 50% of the receipts are from non-members:
| Taxable income of Club DEF | $ | |
|---|---|---|
| Net Surplus | 22,000 | |
| Less: Rent | 58,000 | |
| Interest | 3,000 | 61,000 |
| Adjusted Trade Deficit | (39,000) | |
| Add: Rent | 58,000 | |
| Interest | 3,000 | |
| Total Chargeable Income | 22,000 | |
Track your income sources
Use the IRAS tracking spreadsheet to:
- Record all revenue receipts from voting and non-voting members
- Calculate proportion of gross revenue receipts received from members
- Determine if you meet the 50% rule and whether you are deemed to carry on a business.
Download: Income tracking spreadsheet (29 KB).
Trade associations
A trade association refers to a body of traders, businessmen or professionals who come together to promote and protect the common interest of the group.
If you operate a trade association in Singapore, you need to understand how to classify your members as this affects your tax treatment.
Members of trade associations are persons who are entitled to vote at the general meeting of the body, where they exercise effective control over the affairs of the trade association.
The following types of members are considered Singapore trade association members:
- Persons, other than companies, resident in Singapore
- Companies incorporated in Singapore (excluding branches or offices located outside Singapore)
- Branches or representative offices of foreign companies (i.e. companies incorporated outside of Singapore) located within Singapore.
Tax treatment for trade associations
What you need to know
Your tax treatment depends on whether more than 50% of your receipts derived through entrance fees and subscriptions from Singapore members are claimable as tax-deductible expenses1 by those members. Singapore members are defined in the section above.
____________________
1 Subscription fees are generally tax-deductible expenses for Singapore members, but entrance fees are not as they are capital in nature.
How to calculate the proportion of entrance fees and subscription fees from Singapore members that are claimable as tax deductions
Use this formula:
Subscriptions from Singapore members ÷ Entrance fees and subscriptions from Singapore members
If the result is:
50% or less: You only pay tax on income from non-members.
More than 50%: You are deemed to be carrying on a business and pay tax on your operating surplus and income from non-members.
Your tax treatment
| Proportion of entrance fees and subscriptions from Singapore members that are claimable as tax deductions | Business status | What is taxable |
| 50% or less | Not deemed to be carrying a business | Only income from dealings with non-members is taxable. |
| More than 50% | Deemed to be carrying on a business |
Income derived from transactions with foreign members is not taxable. |
How to apply the 50% rule for trade associations
Examples
| Income and expenditure account of Trade Association ABC | |||
|---|---|---|---|
| $ | $ | ||
| Salaries and Wages | 24,000 | Entrance Fees (Singapore members) | 20,000 |
| Administrative expenses | 5,000 | Annual subscriptions (Singapore members) | 4,000 |
| Utilities | 5,000 | Seminar fees (members) | 6,000 |
| Seminar fees (non-members) | 4,000 | ||
| Rental income (non-members) | 20,000 | ||
| Surplus | 30,000 | ||
| 64,000 | 64,000 | ||
Compare proportion of entrance fees and subscriptions received from Singapore members that are claimable as tax deductions:
Subscriptions received from Singapore members ÷ Entrance fees and subscriptions received from Singapore members
= $4,000 ÷ ($4,000 + $20,000)
= 16.7%
Trade Association DEF is not deemed to be carrying on a business because less than 50% of the entrance fees and subscriptions received from Singapore members are claimable as tax deductions. In this case, only income derived from non-members are subject to tax.
| Taxable income of Trade Association ABC | $ |
|---|---|
| Income received from non-members | |
| Seminar fees (non-members) | 4,000 |
Less: Expenses attributable to non-members [4,000 / (20,000 + 4,000 + 6,000 + 4,000) X 34,000] | (4,000) |
| Add: Rental income (non-members) | 20,000 |
| Total Chargeable Income | 20,000 |
Note: Any losses incurred by the trade association will be disregarded, and cannot be carried forward, as the trade association is not deemed to be carrying on a business.
| Income and expenditure account of Trade Association DEF | |||
|---|---|---|---|
| $ | $ | ||
| Salaries and Wages | 42,000 | Entrance Fees (Singapore members) | 4,000 |
| Administrative expenses | 5,000 | Annual subscriptions (Singapore members) | 35,000 |
| Utilities | 5,000 | Seminar fees (members) | 6,000 |
| Seminar fees (non-members) | 4,000 | ||
| Rental income | 10,000 | ||
| Surplus | 7,000 | ||
| 59,000 | 59,000 | ||
Compare proportion of entrance fees and subscriptions received from Singapore members that are claimable as tax deductions:
Subscriptions received from Singapore members ÷ Entrance fees and subscriptions received from Singapore members
= $35,000 ÷ ($4,000 + $35,000)
= 89.7%
Trade Association DEF is deemed to be carrying on a business because more than 50% of the entrance fees and subscriptions received from Singapore members are claimable as tax deductions:
| Taxable income of Trade Association DEF | $ |
|---|---|
| Net Surplus | 7,000 |
| Less: Rental income | (10,000) |
| Adjusted Trade Surplus (Deficit) | (3,000) |
| Add: Rental income | 10,000 |
| Total Chargeable Income | 7,000 |
Note: Income derived from transactions with foreign members are not subject to tax. It follows that expenses that are attributable to income from foreign members shall also be disallowed.
Management corporations
A management corporation (MC) is set up by the legal owners of a strata development (e.g. condominiums and shopping complexes) under the Building Maintenance & Strata Management Act 2004 to provide for the proper maintenance and operation of the building and the common areas.
The subsidiary proprietors2 share the cost of maintenance, insurance, and any other common expenses by making contributions to the funds which are managed by the MC.
____________________
2 Subsidiary proprietors are purchasers to whom a developer has transferred ownership of a unit in the strata development.
Tax treatment for management corporations
An MC is regarded as a taxable body of persons separate from the subsidiary proprietors or flat owners. The tax treatment of an MC is the same as a club or similar institution.
Town Councils
Town councils are established under the Town Council Act 1988 to manage and maintain common property in housing estates. They are separate taxable entities from the residents and property owners they serve.
Tax treatment for town councils
The tax treatment of various payments depends on:
(a) Whether the income is received from residents/owners of the properties in the town; and
(b) Whether the income is received for the common purpose for which the Town Council is established.
| Tax treatment | Income derived from | Examples |
|---|---|---|
Not subject to tax | Residents/owners of properties in the town | Fees received for the common purpose for which the town council is established such as:
|
| Subject to tax | Residents/owners of properties in the town | Fees received for other services performed that are not aligned with the common purpose for which the town council is established such as:
|
| Third parties who are not residents/owners of properties in the town |
|
Contact IRAS if you have income sources not covered in these examples or need clarification on specific situations.