Corporate Volunteer Scheme

Company A (with a 31 Dec financial year end) sends its employees to provide volunteering services to IPC X and IPC Y. Assuming that the expenditures do not qualify for Section 14(1) deduction, the following tables illustrate the application of the relevant expenditure caps:

Qualifying expenditure incurred before 1 Jan 2024

* The qualifying deduction is capped at $50,000 per IPC per calendar year before 1 Jan 2024.

# Due to the $50,000 cap imposed on each IPC per calendar year before 1 Jan 2024, no tax deduction under CVS will be given to other businesses that provide volunteering services to IPC Y in 2020. A further tax deduction of $10,000 ($50,000 - $40,000) under CVS can be given on qualifying expenditure incurred by other businesses that provide volunteering services to IPC X in 2020.

^ As the qualifying expenditure is capped at $250,000 per business per YA, Company A can claim another $160,000 ($250,000 - $90,000) in qualifying expenditure under CVS in YA 2021.

Qualifying expenditure incurred from 1 Jan 2024 to 31 Dec 2026

^a The qualifying deduction is capped at $100,000 per IPC per calendar year from 1 Jan 2024 to 31 Dec 2026.

^b Due to the $100,000 cap imposed on each IPC per calendar year from 1 Jan 2024 to 31 Dec 2026, no tax deduction under CVS will be given to other businesses that provide volunteering services to IPC Y in 2024. A further tax deduction of $60,000 ($100,000 - $40,000) under CVS can be given on qualifying expenditure incurred by other businesses that provide volunteering services to IPC X in 2024.

^c As the qualifying expenditure is capped at $250,000 per business per YA, Company A can claim another $110,000 ($250,000 - $140,000) in qualifying expenditure under CVS in YA 2025.

Business and IPC should agree on the type and duration of volunteering service, as well as the estimated expenditure, before the business provides the service, taking into account the respective expenditure caps applicable to the business and the IPC. Thereafter, the business is to download and complete the BIPS Service Giving Form A and Declaration for the IPC’s endorsement.

After the business carries out its volunteering service, it shall seek the IPC’s endorsement on the completed BIPS Service Giving Form B with the actual expenditure. Thereafter, the IPC can submit the endorsed Form A, Declaration and Form B electronically to IRAS via mytax.iras.gov.sg using the BIPS Service Giving Declaration Form Submission digital service by the end of January of the following year.

From 2 Dec 2019, businesses need not submit documentation proof for the IPCs’ verification for related expenses that make up less than 5% of the total qualifying expenditure for that volunteering project. However, businesses should retain documentation for usual record-keeping purpose and for verification by IRAS for tax claims.

Businesses can claim CVS tax deduction in its tax computation based on the amount endorsed by the IPC in the Form B when submitting its income tax return.

As CVS aims to encourage employers to give back to society, there is no requirement that the qualifying business must be a tax resident in Singapore. However, the qualifying business must be carrying on a trade or business in Singapore.

Non-resident businesses which are subject to final withholding tax will not qualify for CVS as they are currently taxed at reduced final withholding tax rates on gross income, and not on net income.

Investment holding companies do not qualify for CVS as they derive only passive income such as dividend, interest or rental, and are not regarded to be carrying on a trade or business for tax purposes.

Trusts are generally used as passive investment vehicles with no active business operations. Hence, they do not qualify for CVS. However, a Registered Business Trust, which is treated as a company for tax purposes, qualifies for CVS.

Service companies render services to/ on behalf of their related companies.

Service companies that derive arm's length fees will qualify for CVS if they prepare their tax computations under the normal tax rules. If a service company elects to use the cost plus mark-up basis of assessment, the company will not qualify for CVS. This is because an acceptance of mark-up as the chargeable income of the company is net of all available deductions and allowances (including CVS).

Qualifying wages consist of basic wages, including the monthly variable component but excluding employer's contributions to CPF, bonuses, benefits-in-kind, allowances and other components of wage costs.

Only wages for the time spent volunteering during working hours at the IPC's premises will qualify for CVS. For volunteering events which are provided outside the IPC's premise, only wages for time spent at the volunteering event will qualify for CVS.

Wages for time spent preparing for and spent travelling to and fro for the volunteering event will not qualify for CVS.

Any reasonable apportionment method is acceptable (e.g. to apportion using the number of working days or working hours spent performing the service for the IPC or on secondment with the IPC.)

From 2 Dec 2019, businesses are given an option to claim tax deduction on wage expenditure based on fixed hourly rates in lieu of actual salary: at $10 per hour for general volunteering and $20 per hour for skills-based volunteering.

No, expenditure incurred as a form of overtime pay is not allowed under CVS. However, if time off in lieu is given to the employee for the period during which services are provided outside working hours instead of overtime pay, the salary expenditure can be prorated and allowed accordingly.

A pure donation of goods will not qualify for CVS. If it is necessary for goods to be given to IPCs in the course of volunteering, the expenditure incurred on these goods will qualify for CVS.

Example
A company sends its employees to organise a Christmas party and incurs cost to purchase toys to be given to beneficiaries as presents. This cost will qualify for CVS. If this company manufactures toys and supplies its toys for the party, the qualifying amount will be the manufacturing cost and not the selling price of the toys.

In addition, expenditure incurred on goods consumed in the process of volunteering are allowable, as long as there is an accompanying service provided, and all qualifying conditions are met.

In the case where the company supplies toys that it manufactures for the party, it has appropriated its trading stock for a non-trade purpose. Under Section 10J of the Income Tax Act 1947, the open market value of the toys supplied for the party as at the date of appropriation is treated as the company's income from its trade or business for the YA relating to the basis period in which the trading stocks were appropriated. The company is required to report its appropriation of trading stocks for a non-trade purpose to the Comptroller of Income Tax in the AC Reporting Form (PDF, 191KB) at the point of filing its tax return.

Learn more about the tax treatment on appropriation of trading stocks for non-trade or capital purposes and conversion of non-trade or capital assets to trading stock (PDF, 388KB).

Yes, expenditure incurred on food consumed, decorations and goodie bags provided during an event in the course of volunteering are allowable, given that the expenditure was incurred only because of the volunteering services.

Yes, expenditure incurred on transport (e.g. hiring of buses) provided during an event in the course of volunteering are allowable, given that the expenditure was incurred only because of the volunteering services. However, if private cars are used as a mode of transport, these private car expenses have to be excluded as they are disallowed for deduction under section 15 of the Income Tax Act 1947.

No, expenditure incurred to reimburse the employees to travel from his/ her home to the IPC premises and vice versa does not qualify for CVS as it is considered as a personal expense of the employee.

No, expenditure incurred by a business for sending its employees to perform volunteering services overseas for a local IPC does not qualify for CVS as CVS is intended to support local volunteer activities only.

IPCs have the right to determine the expenditure items they wish to endorse as long as the expenditure meet the 4 requirements.

IPCs can also decide to endorse an amount lower than the actual cost incurred by the business if they consider it reasonable, subject to the IPC's entitlement cap. In the event of disagreement, IRAS will allow the deduction based on the amount endorsed by the IPCs.

To avoid uncertainty, the business and IPC should agree upfront on the type of expenditure and estimated expenditure that it wishes to claim under CVS.

IPCs have the right to endorse any lower amount they consider reasonable, subject to the IPC's entitlement cap. In the event of disagreement, IRAS will allow the deduction based on the amount endorsed by the IPCs. To avoid uncertainty, the business and IPC should agree upfront on the type of expenditure and estimated expenditure that it wishes to claim under CVS.

The business expenditure cap of $250,000 per YA will be applied at the sole-proprietor level, which means that the expenditure cap is the same regardless of the number of businesses owned by the sole-proprietor.

A secondment is a temporary transfer of an employee to work for an IPC over a few days, weeks, months, or years and can be done in an interspersed manner.

No, employees do not have to perform services which are related to the business in order to qualify for CVS.

For example, an accountant from an accounting firm does not necessarily have to perform accounting services for an IPC.

As per existing tax treatment for business expenses, any unutilised tax deductions from CVS will form part of the business loss and can be carried forward, carried back, or transferred under the Group Relief system, subject to existing rules.

Qualifying expenditure for CVS are considered to be common expenses to be apportioned to each income stream using an appropriate basis (e.g. turnover basis).

Under the GST Act 1993, input tax is claimable if it is incurred to make a taxable supply. A supply exists only when a consideration is received in return for the provision of goods or services. Hence, services performed for free (e.g. volunteering) is not considered a supply. As for wage expenses incurred in volunteering, there is no GST on them and hence, no input tax claim arises. On the other hand, any GST on incidental expenses incurred in the course of volunteering is not claimable as volunteering is not a taxable supply.

A single Corporate Social Responsibility initiative may benefit from either the matching grant under the Share as One Programme or CVS, but not both.

IRAS takes a serious view of any non-compliance or abuse of CVS.

Offenders who are convicted of fraudulent tax deductions under CVS can face penalties of up to 400% of the amount of tax undercharged; a fine not exceeding $50,000; and/or imprisonment.