Sponsors should declare gifts to tax authorities

A report on a couple who received substantial sponsored gifts for their wedding raises questions about tax liabilities in instances like this (Anger over influencer's sponsored wedding; Sept 7).

The view of the Inland Revenue Authority of Singapore (Iras) is that "sponsorships of products or services received in return for writing or reviewing the sponsors' products may be taxable and must be declared".

The sponsored gifts were likely provided because of the perceived exposure, hence these gifts should be deemed commercial in nature.

A taxpayer should not have the misconception that the individual has a choice with tax compliance.

Given an option, all rational people will choose not to pay tax.

As the tax authority, Iras needs to provide clarity and enforce tax responsibilities.

It has done impressively in working with employers to submit employees' income tax returns.

It should do something similar for individual taxpayers when it comes to other sources of income as well.

In this case, since the companies were providing the couple with gifts as a form of marketing expenditure, Iras could provide these companies with an avenue to submit information about the sponsorship to the authorities.

If these companies fail to provide the information, they should not be allowed to claim these gifts as business expenses, and these gifts should not be tax deductible on the companies' tax submissions.

Similarly, private-hire car apps such as Uber and Grab should readily have their drivers' detailed earnings and assist in providing the tax-related information to Iras instead of having the drivers submit their own tax returns.

Cho Hon Loon

A version of this article appeared in the print edition of The Straits Times on September 16, 2017, with the headline 'Sponsors should declare gifts to tax authorities'. Subscribe