Businesses may become a positive influence in the community by making a significant difference. One method is to make monetary contributions you can convert to a tax relief donation under the law in Singapore.
Every dollar you spend will reduce your taxable income by 2.5 cents. There is a chance for you to earn a 250 per cent charitable contribution deduction for your donation. The Singapore government fosters such giving through measures that benefit everyone concerned. Individuals and companies can make a tax-deductible gift to a qualifying organisation and claim the related tax deduction.
What are tax relief/deductible donations?
A tax relief donation under the laws of Singapore is the donation of money or products to a tax-exempt entity, such as a charity. It can assist in reducing your taxable income. Among the most common types of tax-deductible company gifts are:
- Any donation to organisations the Institutions of Public Character (IPCs) recognise.
- All donations are given through campaigns or from any crowdfunding platform in Singapore to name facilities of designated beneficiaries, such as relics and public sculptures.
- Donations to approved donation programmes in which the IPC or a recipient acknowledges the donor name in their marketing, like CSR activities or advertising collaterals around Singapore.
How much of the donation is tax-deductible?
The 250 per cent tax deduction is for qualifying donations made to IPCs. Nevertheless, the tax relief donation scheme of the Singapore government gained an extension for a further two years, or till December 31, 2023.
Donors do not need to declare the gift amount on their tax returns. The IRAS will receive the information about your contribution through electronic transmission.
Your tax assessments will automatically reflect qualified donations for tax deductions based on the provided information. However, the IRAS will no longer accept tax deduction applications based on contribution receipts.
What are the requirements for tax-deductible donations?
A tax relief donation recognised by the Singapore government includes any charitable contributions during the preceding tax year. As stated above, donors are not required to declare the gift amount on their tax returns. All donors, individuals and businesses must provide their identification numbers to get tax deductions for donations to the IPCs.
You may also carry forward any unused tax deductions to the following year. When your charitable tax deductions exceed your income for the current tax year, you can include them for up to five years.
5 Types of Tax Donations
Any charitable contribution to an organisationauthorised by the Institution of Public Character (IPC) or the government is considered tax-deductible. Here are the five types of tax relief donations an entity in Singapore can give.
#1 Cash Donations
Donations of cash to local community causes are tax-deductible. This donation applies to corporate and individual donors. However, not all charities or community projects have IPC status. Any donation to charities that do not have IPC status cannot be a tax relief donation in Singapore.
Only straightforward financial donations that do not give a substantial advantage to the donor are tax-deductible. Only the difference between the gift and the benefit value is tax-deductible if a donor receives a benefit in exchange for a donation.
Donations in return for benefits will qualify for tax reduction only if there is no commercial gain to the giver.
#2 Share Donations
This type of donation is only for individual donors. Taxable assets include publicly traded shares on the Singapore Exchange and units in trusts.
An authorised IPC will determine the value of the given shares or units before they can be a tax relief donation for the Singapore government. Entities should establish the commercial worth by the fair market price of the same type of shares or units at the time of the last transaction.
Furthermore, the day of the authorisation of the transfer of the legal title to the authorised IPC will be the day of the donation. This donation arrangement does not permit the transfer of options or restricted shares.
#3 Artefact Donations
Another form of tax relief donation the Singapore government recognises is artefact donations. Individual and corporate contributions to museums can only be valid if they mee following requirements are met:
- The National Heritage Board (NHB) has designated the museum as an Approved Museum.
- NHB must acknowledge the artefact as valuable.
Moreover, entrepreneurs should have the artefact evaluated for its worth by the museum or the NHB before it gets recognised as tax-deductible. The NHB has the authority to confer Approved Museum Status to museums run by public entities.
#4 Public Art Tax Incentive Scheme (PATIS)
Businesses or individuals that donate sculptures or artwork to the NHB or any of its approved beneficiaries for public exhibition are eligible for a tax exemption as of April 2006.
Donors must complete the following requirements for the gift to be acknowledged as a tax relief donation by the Singapore government:
- The donation or charitable contribution of finances or services must be for installing or maintaining public sculptures or works of art.
- Donors should gift their art pieces to an approved recipient for public exhibition.
- NHB is looking for 2D or 3D artworks with aesthetic or historical value.
Furthermore, donors must submit an application to NHB for the monetary value of their donated sculpture or work of art to be determined.
#5 Land & Building Donations
As of April 1, 2003, donations of land or constructions to recognised IPCs are tax-deductible. The donors or the authorised IPC must arrange for a market value evaluation of the given property with an expert before it gets recognised as a tax relief donation by the Singapore government.
The IRAS decides and approves the contribution amount according to its fair market value. Your taxes do not subtract the cost or value. The date of the successful transfer of the property to the designated IPC shall be considered the date of donation.
Help Look After the Future
Singapore Children’s Society is a children’s charity in Singapore that cares for and protects children and youth of all races and religions. Its programmes have developed to suit the evolving needs of children after its establishment in 1952. Today, it operates more than ten service locations islandwide, delivering assistance to children, teenagers and families in need. Visit and explore their website for more information about their services and programmes.
