No. S 386
Income Tax Act
(Chapter 134)
Income Tax (Approved Institutions of a Public Character) (Amendment) Regulations 2006
In exercise of the powers conferred by section 107(2) of the Income Tax Act, the Minister for Finance hereby makes the following Regulations:
Citation and commencement
1.  These Regulations may be cited as the Income Tax (Approved Institutions of a Public Character) (Amendment) Regulations 2006 and shall come into operation on 1st July 2006.
Amendment of regulation 2
2.  Regulation 2 of the Income Tax (Approved Institutions of a Public Character) Regulations 2004 (G.N. No. S 39/2004) (referred to in these Regulations as the principal Regulations) is amended —
(a)by inserting, immediately after the words “the Minister” in the definition of “approved institution of a public character”, the words “, the Comptroller”; and
(b)by inserting, immediately after the definition of “approved institution of a public character”, the following definition:
“ “commercial fund-raiser” means any person who for reward solicits or otherwise procures money or other property for, or purportedly for, the benefit of an approved institution of a public character;”.
New regulation 2A
3.  The principal Regulations are amended by inserting, immediately after regulation 2, the following regulation:
“Duty to donors
2A.—(1)  An approved institution of a public character shall ensure that —
(a)any information provided to donors or the general public is accurate and not misleading;
(b)the following information is disclosed to every person from whom a donation is solicited —
(i)the name of the approved institution of a public character to which the donation will be given;
(ii)the purpose for which the donation will be used; and
(iii)whether any commercial fund-raiser has been engaged in soliciting the donation;
(c)any information relating to donors is kept confidential, and no information relating to a donor is given to any other person without the consent of the donor; and
(d)any arrangement to solicit donations has adequate control measures and safeguards to ensure proper accountability and to prevent loss or theft of donations.
(2)  Where any commercial fund-raiser is engaged by an approved institution of a public character to solicit donations —
(a)the total amount of all donations collected by the commercial fund-raiser shall be paid directly to the approved institution of a public character;
(b)any payment due to the commercial fund-raiser from the approved institution of a public character shall be paid separately by the approved institution of a public character; and
(c)the commercial fund-raiser shall not deduct or set off any payment or expenses due to him from the donations collected.”.
Amendment of regulation 3
4.  Regulation 3 of the principal Regulations is amended —
(a)by deleting paragraphs (3) and (4) and substituting the following paragraphs:
“(3)  The total fund-raising and sponsorship expenses of an approved institution of a public character for the financial year commencing on or after 1st July 2006, and for every subsequent financial year, shall not exceed 30% of the total gross receipts from fund-raising and sponsorships for that financial year, as determined by the following formula:
where
E refers to the total expenses relating to fund-raising for the financial year, including both direct and indirect expenses of any kind other than sponsorship expenses, and including payments made to commercial fund-raisers engaged by the institution;
R refers to the total gross receipts from fund-raising, other than receipts from sponsorships, for that financial year; and
S refers to the total cost or value of sponsored goods and services relating to fund-raising for that financial year as stated in receipts or other documentary evidence presented to the institution, and may in the discretion of the institution include the cost or value of any sponsored goods and services where such receipts or documentary evidence are not available.
(4)  Any donation received by an approved institution of a public character shall only be used —
(a)where the donor has specified an intention that the donation should be used for any specified lawful purpose, for that purpose; or
(b)where the donor has not specified such an intention, according to the purpose communicated to the donor under regulation 2A(b)(ii).
(5)  Where a donation, or any part of it, cannot be used for any of the purposes specified under paragraph (4), the approved institution of a public character shall —
(a)refund the amount to the donor; or
(b)use the amount for such other purposes as may be approved by the Comptroller or the appropriate Central Fund Administrator, as the case may be.”; and
(b)by deleting the words “tax deductible” in the regulation heading.
Amendment of regulation 7
5.  Regulation 7 of the principal Regulations is amended —
(a)by deleting paragraph (1) and substituting the following paragraphs:
“(1)  An approved institution of a public character shall disclose in its financial statement —
(a)the total amount of donations received for the period which qualify for deduction under section 37 of the Act; and
(b)any transaction with any related party, as defined in the applicable Financial Reporting Standards prescribed by the Council on Corporate Disclosure and Governance on related party disclosures.
(1A)  An approved institution of a public character shall disclose in its annual report its policy relating to the management and avoidance of conflicts of interest.
(1B)  A large approved institution of a public character shall ensure that for the financial year commencing on or after 1st July 2006, and for every subsequent financial year, its financial statements comply with the Financial Reporting Standards as prescribed by the Council on Corporate Disclosure and Governance.
(1C)  A large approved institution of a public character shall have not less than 10 members.
(1D)  Where a large approved institution of a public character has fewer than 10 members, it shall —
(a)immediately notify the Comptroller or the appropriate Central Fund Administrator of the occurrence of that fact; and
(b)no later than 6 months from the occurrence of that fact, or such later time as may be approved by the Comptroller or the appropriate Central Fund Administrator, take such measures as are necessary to increase its membership to not less than 10 members.
(1E)  The Comptroller may exempt a large approved institution of a public character from the requirements of paragraphs (1C) and (1D) under such circumstances as the Comptroller may deem fit.
(1F)  For the purposes of paragraphs (1C) and (1D), a reference to the “members” of an approved institution of a public character shall —
(a)where the approved institution of a public character is a company or corporation within the meaning of the Companies Act (Cap. 50), refer to the directors of the company or corporation;
(b)where the approved institution of a public character is a society registered under the Societies Act (Cap. 311), refer to the members of the society;
(c)where the approved institution of a public character is a trust, refer to the trustees; and
(d)in any other case, refer to the persons having the general control and management of the administration of the approved institution of a public character.
(1G)  A large approved institution of a public character shall ensure that its annual report and audited financial statement are published —
(a)on its own Internet website; or
(b)where it does not have its own Internet website, on the Internet website of the appropriate Central Fund Administrator.
(1H)  Where the total gross receipts of an approved institution of a public character from any single fund-raising appeal are not less than $1 million, the approved institution of a public character shall —
(a)maintain separate financial accounts in respect of that fund-raising appeal; and
(b)at the end of the financial year, disclose on its own Internet website or, where it does not have its own Internet website, on the Internet website of the appropriate Central Fund Administrator —
(i)the total gross receipts from the fund-raising appeal;
(ii)the total expenses incurred in the fund-raising appeal; and
(iii)the purposes for which the funds raised in the fund-raising appeal were used or will be used.”;
(b)by inserting, immediately after paragraph (2), the following paragraph:
“(2A)  An approved institution of a public character shall ensure that for the financial year commencing on or after 1st July 2006, and for every subsequent financial year, its auditor certifies in his report whether that institution has complied with the requirements of regulation 3(3).”;
(c)by deleting paragraph (5) and substituting the following paragraph:
“(5)  The auditor of an approved institution of a public character shall be changed at least once every 5 years, whether to another auditor from the same auditing firm or company or to another auditor from a different auditing firm or company, failing which a qualification shall be made in the financial statement of the approved institution of a public character.”;
(d)by deleting the words “An approved institution of a public character shall set out information on its activities and financial accounts in the format specified by the Comptroller —” in lines 1 to 3 of paragraph (6) and substituting the words “An approved institution of a public character shall disclose such information on its activities and financial accounts as may be required by the Comptroller and in such format as may be specified by the Comptroller —”;
(e)by inserting, immediately after paragraph (6), the following paragraph:
“(7)  In this regulation, a “large approved institution of a public character” means an approved institution of a public character with gross annual receipts of not less than $10 million in each of its 2 immediately preceding financial years and, for this purpose, “gross annual receipts” shall include all income, grants, donations, sponsorships and all other receipts of any kind.”; and
(f)by deleting the regulation heading and substituting the following regulation heading:
“Requirements relating to financial statement, audits, annual report, minimum membership, etc.”.
Amendment of regulation 8
6.  Regulation 8(1) of the principal Regulations is amended —
(a)by deleting the word “and” at the end of sub-paragraph (c); and
(b)by deleting the full-stop at the end of sub-paragraph (d) and substituting the word “; and”, and by inserting immediately thereafter the following sub-paragraph:
“(e)its annual report.”.
New regulations 10 to 12
7.  The principal Regulations are amended by inserting, immediately after regulation 9, the following regulations:
“Amendment of governing instruments
10.—(1)  An approved institution of a public character shall not amend its governing instruments except with the approval of the Comptroller or the appropriate Central Fund Administrator, as the case may be.
(2)  Where an approved institution of a public character amends its governing instruments, a copy of the amended instruments shall be submitted by that institution to the Comptroller or an appropriate Central Fund Administrator, as the case may be, within 30 days from the date of amendment.
(3)  For the purpose of this regulation, “governing instruments” shall include the memorandum or articles of association, constitution, by-laws, trust instruments or any rules or regulations governing the objects and administration of an approved institution of a public character, as the case may be.
Suspension or withdrawal of approval
11.—(1)  The approval of an approved institution of a public character by the Minister, the Comptroller or a Central Fund Administrator shall be withdrawn if —
(a)the approved institution of a public character ceases to operate; or
(b)the Minister, the Comptroller or the appropriate Central Fund Administrator determines that the approved institution of a public character no longer serves a purpose for public benefit.
(2)  The Minister, Comptroller or the appropriate Central Fund Administrator may suspend or withdraw the approval of an approved institution of a public character where —
(a)the approved institution of a public character fails to satisfy any condition specified in these Regulations or in regulation 4(1) of the Income Tax (Central Fund Administrators) Regulations 2004 (G.N. No. S 40/2004) at any time during its period of approval;
(b)he is satisfied that there is or has been any mismanagement, misconduct, incompetence or negligence in the administration of the approved institution of a public character; or
(c)he is satisfied that such action is necessary or desirable in the public interest.
(3)  Where the approval of an approved institution of a public character has been suspended or withdrawn under paragraph (2) —
(a)donations made to the approved institution of a public character after its approval has been suspended or withdrawn shall not qualify for deduction under section 37 of the Act;
(b)the approved institution of a public character shall not issue any tax deduction receipts under regulation 4 in respect of donations made to the institution after its approval has been suspended or withdrawn;
(c)the Comptroller or the appropriate Central Fund Administrator shall take reasonable steps to inform the general public of such suspension or withdrawal, and of the matters specified in sub-paragraphs (a) and (b); and
(d)any donation made to the approved institution of a public character after its approval has been suspended or withdrawn, but before the general public has been informed by the Comptroller or the appropriate Central Fund Administrator of such suspension or withdrawal, shall be refunded to the donor without any deduction upon the donor’s request.
Extension of approval
12.  Any application for the extension of the period of approval of an approved institution of a public character shall be made no later than —
(a)2 months before the end of that period; or
(b)any such time as may be stipulated by the Comptroller or the appropriate Central Fund Administrator.”.
Made this 27th day of June 2006.
LIM SIONG GUAN
Permanent Secretary,
Ministry of Finance,
Singapore.
[MF R32.9.2829 V2; AG/LEG/SL/134/2005/22 Vol. 1]
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