Business and IPC Partnership Scheme (BIPS)

The scheme was introduced in Budget 2016 to encourage employee volunteerism through businesses.

Under the BIPS, businesses will enjoy a 250% tax deduction on qualifying expenditure incurred when they send their employees to volunteer and provide services to Institutions of a Public Character (IPCs), including secondments. The scheme will be applicable to services provided from 1 Jul 2016 to 31 Dec 2018.

Please click here to search for the list of IPCs.

Qualifying Conditions

Who Can Qualify 

  1. Companies, sole proprietorships, partnerships (including limited partnerships and limited liability partnerships) and registered business trusts carrying on a business in Singapore; and  

  2. Bodies of persons, e.g. clubs and trade associations, that are deemed to be carrying on a business.

Qualifying Expenditure

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 ExpenditureTax 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).

Example

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.

Non-qualifying Employees

Owners of the businesses, i.e. sole-proprietors, partners and shareholders who are also directors of the same company are not qualifying employees.

Claim Process

BIPS Service Giving Declaration Form

 Flowchart - BIPS

* 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.

 

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