Tax deduction for businesses volunteering with IPCs

SINGAPORE — As part of the company’s corporate social responsibility (CSR) drive, staff from business consultancy and advisory firm EY have been volunteering their skills in areas such as accounting and audit at various charities since 2012. The programme is carried out in partnership with Shared Services for Charities (SSC), an Institution of a Public Character (IPC) that provides such services at affordable rates to charities with the aim of helping them lift governance and organisational standards. As of last year, 34 EY employees have taken part in the programme.

“I learnt more about the objectives of the different charitable organisations, programmes and subsidies that are offered to the less fortunate, and the safeguards in place for oversight and accountability to protect public funds,” said Mr Jed Law, an EY assurance senior associate who volunteered with two non-profit organisations in 2014.

Such charitable acts by businesses — of offering time and services — are now eligible for tax deduction under the Business and IPC Partnership Scheme (Bips). The scheme was introduced in Budget 2016 and is part of the Government’s effort to promote philanthropy and volunteerism.

The pilot Bips starts today and will run until Dec 31, 2018. Under the scheme, businesses will enjoy a total 250 per cent tax deduction on wages and related expenses when they send their employees to volunteer and provide services, including secondments, to IPCs. Such expenses include wages for the time spent volunteering with the IPCs at their premises or events, and money spent on goods consumed while volunteering.

However, each IPC can only endorse up to S$50,000 of qualifying expenditure to be provided with the 250 per cent tax deduction in every calendar year under Bips, while each business is subject to a qualifying expenditure cap of S$250,000 per year of assessment.

“The scheme aims to spur more businesses to provide services to IPCs, as it will defray the cost of doing so … In the long run, the Government hopes to foster a widespread culture of caring in Singapore, where businesses and employees can play a greater role in meeting social needs and building a caring and cohesive society,” said the Ministry of Finance, Inland Revenue Authority of Singapore and Ministry of Culture, Community and Youth in a joint statement yesterday.

Services rendered can include professional ones such as legal, human resources and accounting or general voluntary services, subject to the partner IPC’s agreement, the joint statement said. IPCs are charities that can issue tax-deductible receipts for qualifying donations and are held to a higher standard both in terms of regulatory compliance and governance. There are about 600 such organisations here.

PICs said they hope the Bips scheme can help them close some operational gaps they currently face. SOSD, a volunteer-run animal shelter, said the top three services it hoped to receive are vet services, IT maintenance support for its website, database and email, as well as shelter maintenance such as the renovation of enclosures and grass-cutting.

Currently, cash donations to IPCs qualify for a tax relief of 250 per cent — an incentive that KPMG Singapore’s head of enterprise and tax partner Chiu Wu Hong said “merely facilitates passive philanthropy through donations”.