Understanding Tax Deductions for Donations in Singapore A Comprehensive Guide

1. Understanding Tax Deductions for Donations in Singapore: A Comprehensive Guide Donating to charitable organizations is not only a noble act of giving but can also have tax benefits. In Singapore, the government encourages philanthropy by providing tax deductions for donations. Understanding how these deductions work is essential for both individual and corporate donors. This comprehensive guide will shed light on the intricacies of tax deductions for donations in Singapore. Individual Donors 1. Approved Institutions of a Public Character (IPC) To qualify for tax deductions, donations must be made to IPCs or registered charities. IPCs are organizations that have been approved by the Commissioner of Charities for tax-deductible status. Donors can check an organization's status on the Charity Portal (www.charities.gov.sg). 2. Tax Deduction Cap Individual donors can claim tax deductions of 2.5 times the amount of their donation. The total deduction claimed for a year is capped at 10% of the individual's assessable income. However, if you exceed the cap, you can carry forward the unutilized deduction for up to five years. 3. Eligible Donations Eligible donations include cash donations, computer equipment, art pieces, and shares in approved publicly listed companies. For items like shares and art pieces, the valuation is determined based on market value. 4. Donation Receipts Individual donors should request a donation receipt from the IPC. This receipt should specify the donation amount and date, the IPC's name and registration number, and the donor's name. Corporate Donors 1. Approved Institutions of a Public Character (IPC) Similar to individual donors, corporate donors can claim tax deductions for donations made to IPCs or registered charities. 2. Tax Deduction Cap Corporate donors can claim tax deductions of 2.5 times the amount of their donation, but there is no cap on the total deduction amount. 3. Donation Receipts Corporations should request a donation receipt from the IPC specifying the donation amount and date, the IPC's name and registration number, and the company's name.

2. Keeping Records It's important for both individual and corporate donors to maintain proper records of their donations, including donation receipts, to substantiate their claims in case of an audit by the Inland Revenue Authority of Singapore (IRAS). Making a Meaningful Impact Understanding the tax benefits of charitable giving not only allows you to make a meaningful impact on causes you care about but also maximizes the tax deductions you can claim. By adhering to the regulations and guidelines set by the IRAS, you can make a positive difference in the community while enjoying tax benefits in Singapore.