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Tax Deductible Donations

This section outlines donations that are tax deductible:

Cash Donations

Cash donations made to an approved Institution of a Public Character (IPC) or the Singapore Government that benefit the local community are deductible donations.

Not all registered charities are approved IPCs. Donations made to a charity without approved IPC status are not tax-deductible.

Cash Donations with Benefits

Only outright cash donations that have no material benefit to the donor or institution are tax-deductible. As a concession, however, certain donations made to IPCs on or after 1 May 2006 will be deemed as pure donations although there is benefit given in return for the donation. To qualify for the concessionary tax treatment, donations with benefits given in return will be treated as pure donations if the benefits are treated as having no commercial value. This is the case if:

  • The benefit is given in acknowledgement of the donation;
  • The benefit has no resale value.

This donation scheme applies to both corporate and individual donors.

Shares Donations

Gifts of public shares listed on the Singapore Exchange (SGX) or of units in trusts traded in Singapore to approved IPCs are tax deductible.

Value of the Shares

The approved IPC will determine the value of the donated shares or units. The value of the shares will be based on the price of the same type of shares or units in the open market, at the last transaction of such shares or units on the date of donation.

Date of Donation

The date of donation is the date on which the legal title is transferred to the approved IPC. Donation of options and shares with restriction on holding periods are not allowed under this donation scheme.

Computer Donations

Gifts of computers (including computer hardware, software, accessories and peripherals such as monitors, printers, and scanners) are tax-deductible donations provided:

  • The donation is made to prescribed educational, research and all IPC’s
  • The Infocomm Development Authority of Singapore (IDA) approves the types of hardware and/or software donated. Donors should apply to IDA to assess the worth of the donated equipment.

Capital Allowance on Donated Hardware & Software

When a company incurs capital expenditure on computers bought solely for donation purpose, the company cannot claim capital allowance for this purchase. 

A company may have incurred capital expenditure on computers bought for the purpose of its own trade and fully claimed capital allowance on the computers (i.e. written down value is zero). However, it subsequently does not use them and donates them to one or more IPCs, a balancing charge equal to the current market value of the donated items will be taxed.

This donation scheme applies to corporate donors only.

Artefact Donations

Gifts to museums by individual or corporate donors are tax-deductible donations provided:

  • The museum has obtained the Approved Museum Status with NHB. (National Heritage Board)
  • The artefact has to be deemed worthy of collection by NHB.

Value of Donation

Donors should apply to the museum or NHB to assess the worth of the donated artefact. 

Approved Museum Status

Museums that are owned by public organisations can apply to the NHB for the Approved Museum Status. Starting 1 Apr 2006, the Approved Museum Status may be given to non-profit institutions established to acquire artefacts and making them accessible to the public.

This donation scheme applies to both corporate and individual donors.

Donations under the Public Art Tax Incentive Scheme (PATIS)

As from 1 Apr 2006, companies or individuals who donate sculptures or works of art for public display to the National Heritage Board (NHB) or any of its approved recipients will qualify for tax deduction.

Qualifying Donations under PATIS include:

  • Donation of money or services given towards the installation or maintenance of the sculptures or work of art for public display
  • The donation of a sculpture to an approved recipient for indoor public display
  • Public art works which are two or three dimensional with artistic and or heritage merits as desired by NHB.

Value of Donation

Donors need to apply to NHB to assess the value of the donated sculpture or work of art. 

This scheme is administered by NHB and applies to both corporate and individual donors.

Land and Building Donations

From 1 Apr 2003, gifts of land or buildings to approved IPCs are tax-deductible donations. 

Market Value Appraisal

Donors or the approved IPC need to arrange a market value appraisal of the donated property with a property valuer. The IPC should apply to IRAS for an endorsement of the market value of the donated property. 

Value of Donation

The amount of donation is based on the market value of the property endorsed by IRAS. The cost of valuation is not tax deductible.

Donations Effective 1 Jan 2005

These donations are also tax deductible as of 1 Jan 2005:

  • Donations to name IPCs, IPC facilities, events or programmes
  • Donations to name facilities of approved beneficiaries (including artefacts and public sculptures) under any of the other approved donation programmes
  • Donations under any of the approved donation programmes where the IPC or approved beneficiary acknowledges the donation by including the donor's name or logo in the IPC's collaterals (e.g. banners, publications, advertisements).

Non-Tax Deductible Donations

These donations are not tax deductible:

  • Donations where the donor is essentially advertising at the IPC facility, event, or programme. Donors displaying their banners, products, or other collaterals at the IPC facility, event, or programme to which it has donated is regarded as advertising or marketing expenses and not a donation
  • Donations or gifts that are for a "foreign charitable purpose" (e.g. donations made to some overseas relief funds managed by an approved IPC).

Calculating Tax Deduction

The tax deduction on donation is deducted against your statutory income.

Calculating Tax Deduction Example

Total Income/Statutory Income  

-------»

Less expenses & donations

Assessable income

-------»        

Less personal reliefs 

Chargeable Income

Tax Deductible example

Donation of $12,000 to an approved IPC

If your total statutory income for YA 2016 is $120,000 (i.e. you earned $120,000 in 2015) and you donated $12,000 to an IPC in 2015, your assessable income would be calculated as follows:

Tax Deductible Donations Example

Total Statutory Income

$120,000

Amount of Donation

$12,000

Amount of Deductible Donations

$36,000  ($12,000 x 3)

Assessable Income for YA 2016

= $84,000 ($120,000 - $36,000)

Claiming Tax Deductible Donations

Tax deduction is given for donations made in the preceding year. For example, if an individual makes a donation in 2015, tax deduction will be allowed in his tax assessment for the Year of Assessment (YA) 2016.

You do not need to declare the donation amount in your income tax return. Tax deductions for qualifying donations will be automatically reflected in your tax assessments based on the information from the IPC (such as the donor's name, date and amount of donation on the tax deduction receipt). IRAS will no longer accept claims for tax deduction based on donation receipts. 

Requirement to Produce Identification to IPCs

From 1 Jan 2011, all individuals and businesses are required to provide their identification number when making donations to the IPCs in order to be given tax deductions on the donations.  

Donation Receipts

When donations are tax deductible, the donation receipts issued by approved IPCs will indicate the words "Tax-Deductible". It is important to keep these receipts for your records

Donations Made by Individuals to IPCs via Payroll

The donation will be included automatically in your tax assessment provided:

  • Your employer is under the Auto-inclusion Scheme for Employment Income
  • You have arranged for donations to be deducted from payroll.

If your employer is not under the Auto-inclusion Scheme for Employment Income, you may make the donation claim in your own income tax return.

Donations Made by Corporations and Bodies of Persons

All companies or bodies of persons have to provide their names and tax reference number to the IPCs if they wish to claim tax deductions on their donations.

Anonymous Donors

Donors who wish to remain anonymous and do not wish to claim tax deduction are not required to provide their tax reference numbers to the IPCs. However, if donors subsequently wish to claim tax deduction, they should provide their tax reference numbers to the IPCs. The IPCs would then resubmit the information to IRAS.

 

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