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Tax breaks for firms that engage in charitable work

SINGAPORE — To boost corporate social responsibility and make it easier for employees to give back through their workplaces, businesses will receive tax breaks for sending their employees to volunteer at, and for providing services — including secondment of staff — to certain charities.

Elderly beneficiaries brought on a tour of the Singapore Sports Hub by corporate volunteers. TODAY file photo

Elderly beneficiaries brought on a tour of the Singapore Sports Hub by corporate volunteers. TODAY file photo

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SINGAPORE — To boost corporate social responsibility and make it easier for employees to give back through their workplaces, businesses will receive tax breaks for sending their employees to volunteer at, and for providing services — including secondment of staff — to certain charities.

This will be done through a scheme called the Business and Institutions of a Public Character Partnership Scheme (BIPS), which will be piloted from July this year to Dec 31, 2018.

It will offer qualifying businesses a 250 per cent tax deduction on wages and incidental expenses when they send employees off to volunteer and provide services to Institutions of a Public Character (IPCs), which are registered charities able to issue tax-deductible receipts for qualifying donations to donors. 

The receiving IPC must agree to the tax deduction, which will be capped at S$250,000 yearly per business and S$50,000 per IPC on the qualifying costs. 

The types of staff secondment allowed, subject to the IPCs’ agreement with businesses, include legal, IT, and accounting services, with flexible arrangements permitted and no limit on the duration.

However, donation of goods and wages of the owners of sole proprietorships, partnerships and companies will not qualify for tax deductions. More details on the scheme will be released closer to the BIPS’ starting date of July 1, said the Ministry of Finance. 

Finance Minister Heng Swee Keat said it was the Budget’s way of supporting the National Volunteer and Philanthropy Centre’s efforts to promote and build capacity for giving among corporates here. 

The Government currently allows 250 per cent tax deduction for cash donations and qualifying in-kind donations, such as land and computers, to certain IPCs, and this has seen “good results”, with cash donations rising each year.

“More employees also want to volunteer and we hope businesses will support them,” said Mr Heng.

The Government will also help the Community Chest, which helps raise funds for about 80 voluntary welfare organisations in the social sector, including family service centres and special education schools.

Mr Heng said the Government will provide dollar-for-dollar matching for any additional donations through ComChest’s monthly donation programme, called SHARE, that are over and above the level for FY2015.

This will be done for three years beginning in April. Actively supported by some businesses, SHARE enables ComChest to receive regular donations through payroll deductions or GIRO, said Mr Heng.

Where businesses encourage their staff to donate regularly, the Government will allow part of the matching funds to be used by them to organise corporate social responsibility activities, he said.

These businesses can claim 50 per cent of the matching grant attributed to their increase in donations above FY2015, up to a sum of S$10,000, for approved corporate social responsibility initiatives. The remainder of the matching grant will go to ComChest for the social service sector.

Mr Heng said Minister for Social and Family Development Tan Chuan-Jin will elaborate on this during his ministry’s Committee of Supply debate.

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