This is an incentive scheme to encourage individuals to invest in start-up companies and help the companies grow through their management expertise/business networks etc.
The scheme is available from 1 Mar 2010 to 31 Mar 2020. Investments made on or after 24 Feb 2015 and that are supported by SPRING Start-up Enterprise Development Scheme (SEEDS) and Business Angel Scheme (BAS) will also qualify for the scheme.
There are different qualifying criteria for the various parties to an angel investment deal. Individuals who are interested must first apply to SPRING Singapore which administers the scheme, to be approved as an angel investor.
The tax incentive is for approved angel investors who invest in qualifying start-up companies between 1 Mar 2010 to 31 Mar 2020.
To enjoy a tax deduction, an approved angel investor must:
The tax deduction is given for the YA relating to the basis period in which the last day of the two-year period falls.
The amount of tax deduction for each YA is based on 50% of the cost of qualifying investment, subject to a cap of $500,000 of investment costs i.e. deduction cap of $250,000.
The qualifying deduction will be offset against the individual's total taxable income. Any unutilised deduction in any YA will be disregarded.
An approved angel investor, Mr A, invested $1,500,000 in a qualifying start-up company in May 2015. If he holds the investment until Jul 2017 (i.e. at least two-year holding period), he can claim a tax deduction of $250,000 (50% of $500,000 cap) in his tax return for YA 2018.
In Sep 2016, Mr B (an approved angel investor) invests $400,000 in a qualifying start-up company and holds the investment until Jul 2018 (i.e. less than two-year holding period). Mr B cannot claim any tax deduction.
Please complete and sign Claim for Deduction under Angel Investors Tax Deduction Scheme. (48KB)
You may email us the completed form and the letter of confirmation, issued by SPRING Singapore or mail the documents to:
The Comptroller of Income Tax, IRAS Revenue House 55 Newton Road Singapore 307987
Any gains on disposal of the qualifying investment may be subject to tax in the individual's name depending on his/her circumstances.
Factors such as the volume and frequency of transactions, the interval between the purchase and sales, the manner of financing the purchase and whether he/she is actively involved in trading in a systematic manner with a view of seeking profit would be taken into consideration.
Mr A invested $1,500,000 in a qualifying start-up company in May 2015. He holds the investment until Jul 2017. He claimed a tax deduction of $250,000 (50% of $500,000 cap) in his tax return for YA 2018.
Mr A sells the investment on 31 Jan 2018.
Cost of investment in May 2015
$1,500,000
Amount of deduction allowed in YA 2018 (50% x $500,000)
$250,000
Proceeds from sale of qualifying investment on 31 Jan 2018
$2,500,000
Gain on disposal of investment [$2,500,000 - ($1,500,000 - $250,000)]
$1,250,000