Singapore tax deductions for donations: Donate wisely and save tax

In Singapore, eligible tax-deductible donations can give you a 250% tax deduction.

That means a $1,000 donation can reduce your taxable income by $2,500.

Plus: Donations made to an approved IPC or an institution of a public character are automatically included in your tax assessment.

And most importantly: You can do good while optimizing your tax benefits—a true win-win.

It is true that Singapore offers generous tax deductions for donations, but only if you know how to claim them the right way.

In this comprehensive article, our tax and accounting experts will show you how to maximize your tax savings with donations in Singapore.

Let’s make that happen.

First, we need to understand what donation is in the eyes of Singapore law and what makes donations tax-deductible or not.

1. What is a donation in Singapore?

A donation is a voluntary contribution made without expecting anything in return.

But how do you know if your contribution qualifies as a true donation?

It all comes down to intention. If you’re donating simply to support a cause, without receiving benefits in return, it’s a genuine donation.

To know if your donations are truly genuine, the IPCs use these 3 criteria to qualify.

That means:

• It falls under approved donation categories.
• You give up all rights and control over the gift.
• Any conditions set by you must comply with Singapore tax regulations (the Income Tax Act)

In short, if your donation meets these conditions, you could get a 250% tax deduction while supporting a good cause. 

In other words, the following types of donations are non-tax-deductible:

1. Donations of goods that do not fall within the list of tax deductible donations.
2. Donations made to charities that are not approved IPCs.

With these criteria listed above, we can now understand what donations are considered tax-deductible.

2. What are IPCs in Singapore?

To qualify for tax deduction in Singapore, donations must be made to approved IPCs.

The Singapore government recognizes institutions of a public character for their charitable work. 

Your donations are only eligible for tax deductions if the donation you make is to an approved IPC.

If you wish to donate, you can choose an IPC-verified organization via 3 methods

1. Choose from the list on the Giving.sg website or;
2. Choose from the list of Participating Charities on the Community Development Council (Singapore government website);
3. Check and search for charities, IPCs via the Charity Portal (An official Singapore government website).

Donations to qualifying IPCs are automatically reflected in your tax assessment through an electronic filing system between the IPCs and IRAS. 

 You can check the tax deduction records in your IRAS MyTax Portal to verify your donation details.

Not all charitable organizations are eligible for this enhanced tax relief, you should check the organizations to which you donate. 

1. Religious organizations without IPC status, 
2. Foreign charities lacking a Singapore branch.

3. 7 types of tax-deductible donations you must know

4. How to calculate your tax deduction from donations?

In Singapore, donations to approved institutions can give you a generous tax deduction of up to 250% of the donation amount.

 For example, if you donate $1,000 to an approved charity, you can deduct $2,500 from your taxable income, which makes supporting charitable causes financially beneficial.

To calculate your net income tax payable after donating, follow these steps:

1. Download the IRAS Income Tax Calculator for the Year of Assessement
2. Enter your income and personal reliefs, then input your donation amount (multiplied by 2.5). For example, if you donate $100, enter $250 (2.5 x $100).
3. Check your net tax payable, which will be automatically calculated.

Examples of the Income Tax Calculator

5. How to claim tax deduction for donations?

You don't need to manually declare your donation on your tax return. IPCs will send your donation details electronically to IRAS, and the tax deductions will be automatically applied to your tax assessment.

6. What is a sponsorship, and is it tax-deductible?

6.1. What is a sponsorship?

A sponsorship is when a company or person supports an event, activity, or organization by providing money or resources.

In return, the sponsor receives certain benefits, like advertising or brand exposure. Sponsorships can be in cash or in-kind (such as goods or services).

A key difference between sponsorships and donations is that sponsors expect something in return, while donations are given freely, without expecting benefits.

Whether a contribution counts as a sponsorship depends on the details of the agreement.

6.2. When does a contribution qualify as a sponsorship?

A contribution is considered a sponsorship if the agreement includes any of these conditions:

1. Refund Clause – If the agreement states that the organization must return some or all of the sponsorship money under certain conditions.
2. Exclusivity Clause – If the agreement prevents the organization from accepting funds or support from other sponsors.
3. Commercial Exchange – If the sponsor gets significant business benefits in return, such as the right to control how the funds are used or the ability to sell products/services through the sponsorship.

6.3. Are sponsorships tax deductible?

Sponsorship expenses are not eligible for enhanced tax deductions under Section 37(3) of the Income Tax Act. However, they may be deductible as a business expense under Section 14, if:

1. The expense is incurred entirely for business purposes (e.g., promoting the sponsor’s brand).
2. The deduction is not prohibited under Section 15 of the Income Tax Act.

6.4. What is the difference between a sponsorship and a donation?

In short, donations provide higher tax benefits, while sponsorships are treated as business expenses.

7. How can we help you do your accounting and file your taxes timely?

With over 10 years of experience helping foreign entrepreneurs and business owners deal with Singapore's tax, we can help you with

• Singapore personal tax consulting: We offer expert guidance and support focusing on personal income tax regulations, including rates, exemptions, and deductions.
• Accurate document preparation: We assist in preparing essential personal tax documents, ensuring accuracy and completeness in tax declarations.
• Timely tax filing: Our team facilitates the process of filing personal taxes with the Singapore tax authorities, IRAS.

In addition, Global Link Asia Consulting, as your trusted one-stop consulting partner, helping hundreds of business owners start their businesses overseas and manage their companies with success, can help you

If you are thinking about expanding overseas with Singapore to be your company headquarters, we can help you:

• Register a company in Singapore;
• Open a corporate bank account in Singapore with a 99% success rate;
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• Apply for Singapore business licenses;
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• Support to open, authenticate, and manage Stripe Paypal Business in Singapore, Hong Kong, and the U.S;
• Handle all your tax accounting needs, timely annual filings, auditing, and more.

8. FAQs about  Singapore donation tax deductions

We offer a comprehensive range of accounting and tax services for Singaporean companies. Our services include:

• Tax Consulting including corporate income tax, GST tax, contractor tax, and more.
• Monthly/Annual Tax Accounting services in accordance with Singapore accounting standards (SFRS).
• QuickBooks Consulting and Licensing.
• Corporate Income Tax Return Preparation
• GST Tax Return Preparation.

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