Make charity donations = less tax? no way! 😲‼️

Hellu Zesties! 🍋

You’ve enjoyed your first year of adulthood and hit tax season… ☹️ You open your IRAS letter and see your money is flying away… 💸

BUT DID YOU KNOW? To encourage Singaporeans to support a charitable cause, you can enjoy a 250% tax deduction if you make qualifying donations till 31 December 2026 😲 [link 1 below]

📕 What does that mean?

For every $1 you donate, you get $2.50 deducted from your tax payable. However, do note that the tax deduction is only made in the following year 🗓️. Aka if you donated in 2023, the tax deduction will only take effect in 2024.

📕 How much should I donate to cover my tax?

Everyone's tax will defer. If you are a Singaporean resident, you can calculate your total tax payable with the Excel sheet from IRAS named 'Income tax calculator for tax resident individuals' [link 2 below]

📕 How does this tax deduction thing work?

1️⃣ First, IRAS uses this formula:

Total statutory income - Donations = Assessable Income

For example, if your total yearly income in 2023 is 100k and you donated 10k to an IPC in 2022, your assessable income will be calculated as follows:

100,000 - (10,000*2.5) =

100,000 - 25,000

= $75,000

From this calculation, your total assessable income is $75,000.

2️⃣ IRAS will then take your assessable income and deduct personal reliefs and parenthood tax rebates to give you your Net Tax Payable. (Varies per individual, so I won't touch on this) If you're curious about what tax reliefs you are eligible for, go to [link 3 below]

‼️ What you NEED to know for this to work:

👉 You can claim tax deductible donations only if you donate to charities with Institutions of Public Character (IPC) status

👉 Not all charities have IPC status, so you can check by going to Singapore’s Charity Portal [Link 4 below]

👉 You have to submit your NRIC or FIN No. to the IPC at the point of donation if you want tax deductions

👉 If donations are tax deductible, the donation receipt issued will have the words "Tax Deductible"

👉 Also, only donations without any material benefit to the donor will be fully tax deductible.

👉 Eligible donations will then be automatically deducted from your tax payable the following year!

👉 Still unsure if you can get a tax deduction? You can always drop the charity a call to check.

That’s it! Hope this helps you save some money next year, all while supporting a cause you believe in. ✨ If you want more adulting content, drop a like and follow! Otherwise, save this post for future reference 😊

Zestin’ Out,

Melly 🐥

🔗 External hyperlinks aren’t working in lemon8, so here you go!

➿ Link 1: https://www.iras.gov.sg/taxes/other-taxes/charities/donations-tax-deductions

➿ Link 2: https://www.iras.gov.sg/quick-links/calculators

➿ Link 3: https://www.iras.gov.sg/taxes/individual-income-tax/basics-of-individual-income-tax/tax-reliefs-rebates-and-deductions/tax-reliefs

➿ Link 4: https://www.charities.gov.sg/Pages/FAQs.aspx

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