Q：
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What are Charitable institutions?
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A：
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Charity is not equivalent to voluntary or non-profit-making organization. Charity must be established exclusively for charitable purposes that classified into four principal divisions which are the relief of poverty; the advancement of education; the advancement of religion and other purposes of a charitable nature beneficial to the community not falling under any of the preceding heads.
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Q：
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Must the Charity be established for public benefit?
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A：
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Yes, a purpose is not charitable unless it is for public benefit. The Inland Revenue Department agrees with the interpretation of the Charity Commission of the UK that the public benefit requirement has two aspects:
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the benefit aspect; and
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the public aspect.
An institution or trust cannot generally be charitable if it is in principle established for the benefit of specific individuals. However, it’s difficult to lay down any precise definition of what constitutes a sufficient section of the public. Each case must be considered on its own merit.
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Q：
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Are there any examples that the courts have considered to be non-charitable purpose?
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A：
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The courts have considered various situations where charity status was claimed. Purposes held not to be charitable purposes include:
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attainment of a political object (such as furthering the interests of a particular political party, procuring changes in laws and procuring a reversal of government policy or of particular decisions of governmental authorities);
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promotion of the benefits of the founders or subscribers;
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encouragement of a particular sport such as football or cycling; and
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provision of a playing field, recreation ground or scholarship fund for employees of a particular company.
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Q：
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Is a charity exempt from tax in Hong Kong?
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A：
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Yes, a charity is exempt from tax under section 88 of the Inland Revenue Ordinance (“IRO”). The general tax exemption contained in section 88 is subject to conditions and a charity subject to tax would continue to be a charity.
Section 88 of the IRO provides that if a charity carries on a trade or business, the profits from such trade or business are exempt from profits tax only if:
1.
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the profits are applied solely for charitable purposes; and
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2.
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the profits are not expended substantially outside Hong Kong; and
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3.
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either
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（1）
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the trade or business is exercised in the course of the actual carrying out of the expressed objects of the charity; or
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（2）
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the work in connection with the trade or business is mainly carried on by persons for whose benefit such charity is established.
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Q：
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Is it available to check whether an organization is a tax-exempt charity?
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A：
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Yes, to enable members of the public making donations to check whether such donations qualify for a tax deduction, a list of charitable institutions and trusts of a public character recognized by the Inland Revenue Department as exempt from tax under section 88 of the IRO is available at the Inland Revenue Department’s website. A tax-exempt charity should inform the Inland Revenue Department if there is a change in its name as soon as possible. Otherwise, donors may not be able to find its new name from the above list.
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FAQ
