Singapore is a country that encourages philanthropy and charitable giving. In order to promote this culture, the government has introduced tax incentives for individuals and corporations who donate to registered charities.
The tax incentive is known as the Donation Tax Deduction (DTD) scheme. Under this scheme, donors can claim a deduction from their taxable income for the amount of money donated to a registered charity.
Who qualifies for DTD?
Individuals, sole proprietors, partnerships, and companies that are residents of Singapore are eligible for DTD. Non-residents and foreign companies do not qualify for DTD.
To be eligible for DTD, donations must be made to an Institution of Public Character (IPC) or a qualifying non-profit organization (QNPO). IPCs are charities that have been approved by the Commissioner of Charities while QNPOs are organizations that perform activities that benefit society in general.
How much can you claim under DTD?
The amount of tax deduction you can claim depends on your tax residency status and the type of donation made.
For individuals and corporate donors who are tax residents in Singapore, they can claim:
- 250% tax deduction on qualifying donations made from 1 January 2016 to 31 December 2021
- 300% tax deduction on qualifying donations made from 1 January 2022 to 31 December 2025
- 200% tax deduction on qualifying donations made from 1 January 2026 onwards
For corporate donors who are not residents in Singapore but have a permanent establishment in Singapore, they can claim:
- A deduction equivalent to the amount donated
What types of donations qualify for DTD?
Donations made in cash or kind (such as shares or property) are eligible for DTD. However, there are some restrictions on certain types of donations.
For example, if you donate artwork or artefacts which were purchased by you within three years before making the donation, you will only be able to claim a deduction based on the cost price of these items.
How do you claim DTD?
To claim DTD, donors need to submit their claims when filing their annual income tax returns with IRAS (Inland Revenue Authority of Singapore). Donors should also ensure that they obtain official receipts from the IPCs or QNPOs they donate to as proof of their donation.
In conclusion, Singapore’s Donation Tax Deduction scheme is a great incentive for individuals and corporations looking to give back to society. By donating to registered charities in Singapore, donors not only contribute towards good causes but also receive significant tax benefits.