Donations, not being income, are never taxed
20 Apr 2005I refer to the article, 'Tax and the spirit of giving' by Ernst & Young (BT, Jan 12).
The article said that all income of a charity, including donations but excluding income from a qualifying trade or business, is exempt from tax only if the charity spends at least 80 per cent of such income for charitable purposes in Singapore within 24 months.
This is incorrect. Donations are not regarded as income and are, therefore, not taxed, whether or not the charity spends at least 80 per cent of its receipts on charitable purposes in Singapore. While non-donation receipts are taxable as income, they may be exempt from tax if at least 80 per cent of receipts, including donations, are spent on charitable purposes in Singapore.
The article said that given the significant contribution to tsunami relief, many charities would not be able to meet the 80 per cent rule for tax exemption.
MOF would like to point out that all charities granted a permit to raise funds for the tsunami victims have been allowed to discount these funds when computing whether or not the 80 per cent rule has been satisfied.
HAN KOK JUAN
DIRECTOR (SOCIAL & SECURITY PROGRAMMES)
MINISTRY OF FINANCE