WWLegal.com :: Donations and GST

Donations and GST
Posted on Thursday, February 24, 2005 - 12:36 PM

In light of recent donation drives for Tsunami victims, it is appropriate to bring to the attention of donors and recipients of donations a letter from IRAS that appeared in Streats in their 12 October 2004 issue.
The letter reproduced from Streats is as follows:

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Only donations sans return are GST exempt

WE refer to Mr Ong Lay Kheng's letter, "Who gets GST paid on donations to charity shows?" (Streats, Oct 6).

All contributions to charities that are outright donations with no return in kind or cash are not subject to GST.

The NKF Charity Show entitled donors who called the 1900 number to chances in the lucky draws built into the fund-raising campaign, so there is a return.

There are three separate 1900 numbers for $5, $15 and $25 donations. Callers to these numbers were entitled to one, three and five chances in the lucky draws respectively.

Such donations giving chances in a lucky draw are not outright donations and are deemed a purchase of a lucky draw ticket. Such contributions are subject to GST.

GST forms part of the tax collections that go towards the funding of government expenditure, with social development, such as education, healthcare and community involvement, taking up about 45 per cent of government expenditure.

Where donors give outright donations by calling the NKF directly and pledging to donate with a separate cheque or through monthly Giro payments, such contributions are not subject to GST and the donors will also get double tax deduction for their donations.

- Mrs Lee Leng Kiong,
director (corporate communications),
Inland Revenue Authority of Singapore

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The relevant statutory provision is in section 3(3) of the Goods And Services Act which states:

"Where a body has objects which are in the public domain and are of a political, religious, philanthropic or patriotic nature, it is not to be treated as carrying on a business only because its members subscribe to it, if a subscription obtains no facility or advantage for the subscriber other than the right to participate in its management or receive reports on its activities."

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