Who Can Qualify
Companies, sole proprietorships, partnerships (including limited partnerships and limited liability partnerships) and registered business trusts carrying on a business in Singapore; and
Bodies of persons, e.g. clubs and trade associations, that are deemed to be carrying on a business.
The qualifying expenditure includes:
- Basic wages
- Related expenses incurred only because of the services provided to IPCs. These expenditures must meet the following requirements:
a) Not reimbursed by the IPCs at any time;
b) Incurred only because of the volunteer services;
c) Not considered as personal, living, or family expenses; and
d) Not capital expenditure.
The business will in total receive a 250% tax deduction on the qualifying expenditure incurred, subject to the receiving IPC's agreement.
|Qualifying Expenditure||Tax Deduction Given|
|Currently deductible under Section 14(1) of the Income Tax Act |
- 100% tax deduction under Section 14(1) of the Income Tax Act
- Additional 150% tax deduction, subject to meeting the relevant conditions under BIPS
|Currently not deductible under Section 14(1) of the Income Tax Act ||- 250% tax deduction, subject to meeting the relevant conditions under BIPS|
The qualifying expenditure is subject to a cap of $250,000 per business per Year of Assessment (YA).
A qualifying expenditure cap of $50,000 is also imposed on each IPC per calendar year. For the year 2016, the qualifying expenditure cap imposed on each IPC is $25,000 (6/12 x $50,000).
Company A (with a 31 Dec financial year-end) sends their employees to provide volunteering services to IPC X and IPC Y during the year 2017. Assuming that the expenditures do not qualify for Section 14(1) deduction, the following table illustrates how the expenditure cap imposed on businesses and IPCs work:
| IPC|| Expenditure incurred|| Qualifying expenditure for BIPS || Tax deduction granted|
| X#|| $40,000|| $40,000|
$40,000 x 250% = $100,000
| Y#|| $70,000 || $50,000*|
$50,000 x 250% = $125,000
| || || $90,000^|| |
* Capped at $50,000 as qualifying deduction is capped at $50,000 per IPC per calendar year.
# Due to the $50,000 cap imposed on each IPC per calendar year, no tax deduction under BIPS will be given to other businesses that provide volunteering services to IPC Y in 2017. A further tax deduction of $10,000 ($50,000-$40,000) under BIPS can be given on qualifying expenditure incurred by other businesses that provide volunteering services to IPC X for year 2017.
^ As qualifying expenditure is capped at $250,000 per business per YA, Company A can claim another $160,000 ($250,000 - $90,000) in qualifying expenditure under BIPS in YA 2018.
Owners of the businesses, i.e. sole-proprietors, partners and shareholders who are also directors of the same company are not qualifying employees.
BIPS Service Giving Declaration Form
* IPCs are to submit both completed BIPS Service Giving Declaration Form A and B electronically to IRAS via the 'BIPS Service Giving Declaration Form Submission' e-Service.