SCHOLARSHIPS AND BURSARIES FOR MEMBERS OF ASSOCIATIONS (Income tax exemption on contributions to associations' funds)

Mr Yeo Toon Chia asked the Minister for Finance if consideration will be given to income tax exemption in respect of contributions to funds which are set up by registered associations to provide for scholarships or bursaries for members of the associations and their families.

The Minister of State for Finance (Mr Tang See Chim) (for the Minister for Finance): Mr Speaker, Sir, the Income Tax Ordinance provides exemption from income tax on contributions to funds for the provision of scholarships in a university or an educational institution which is not operated as a profit-making body. This relief is provided under paragraph (c) (vi) of section 37 (2) of the Income Tax Ordinance.

In considering applications, my Ministry would regard as desirable criteria to qualify for such reliefs that the funds be properly constituted and that the scholarships and bursaries be open to all members of the public, irrespective of their race and religion. My Ministry would find it more difficult to allow the same privilege to registered associations which restrict their scholarships and bursaries to members of the associations and their families only, as this can easily lead to abuse. If such exemption is allowed, it would not require much imagination for people to take advantage of it to avoid payment of income tax by forming associations of small groups to pay for the education of their children.