The tax system in Singapore is quite straightforward with taxable income and non-taxable income clearly stated in IRAS. However, there are many ways to lower tax legally which are often neglected by business owners who did not engage a TRUE ACCOUNTANT.
To continue encouraging Singaporeans to give back to the community, the Minister for Finance has announced in Budget 2018 that the 250% tax deduction for qualifying donations will be extended for another three years till 31 December 2021. So if you donate $1,000 to an approved IPC, you can claim tax deduction of $2,500.
Corporate Tax Reduction
A company who has a Chargeable Income $200,000 per annum after deducting all permitted expenses should consider lowering it tax via donation since partial exemption kicks in after 3 years for Starts Up Companies.
WITHOUT DONATION
Chargeable Income $200,000
Less 75% exemption on $10,000 $7,500
Less 50% exemption on $190,000 $95,000
Amount Exempted on Tax $102,500
Estimated tax payable $16,575
WITH DONATION
Chargeable Income $200,000
Less Donation of $20,000 $50,000
Revised Chargeable Income $150,000
Less 75% exemption on $10,000 $7,500
Less 50% exemption on $140,000 $70,000
Amount Exempted on Tax $127,500
Estimated tax payable $12,325
Types of Approved Donations
- Cash Donation
- Shares Donation
- Artefact Donation
- Donations under Public Art Tax Incentive Scheme
- Land and Building Donation
Cash donations made to an approved Institution of a Public Character (IPC) or the Singapore Government for causes that benefit the local community are deductible donations, provided you do not receive any material benefits, such as advertising exposure or other gifts in kind.
Not all registered charities are approved IPCs. Donations made to a charity without approved IPC status are not tax-deductible.
Please search in Charity Portal to get a full list of approved IPC. All donations must be made before the financial year end for you to claim your tax relief for Year of Assessment.
Donation Matters that you must know
- When donations are tax deductible, the donation receipts issued by approved IPCs will indicate the words “Tax-Deductible”.
- 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.
You may be able to claim tax deductions on employment expenses ‘wholly and exclusively’ incurred in earning your income. This means you used your own money to pay for expenses necessary to your employment such as travel expense, entertainment expense, subscriptions, etc.
Yes. All business expenses are claimable except for private S plated car expenses, etc.