Guide to Charitable Donations
Donations to tax-exempt charities for charitable purposes can be deducted from your net assessable income under salaries tax, assessable profits under profits tax and total income under personal assessment.
In this guide, we detail more about these deductions.
Eligibility for Deduction
You can claim a deduction for a donation of money to any charity that is exempted from tax under section 88 of the Inland Revenue Ordinance for charitable purposes. You can also claim a deduction for any approved charitable donation made but not claimed by your spouse.
Payments Not Accepted as Allowable Deductions
Not all payments to tax-exempt charities are deductible. The following are examples of payments not accepted as allowable donations:
- Payments for lottery or raffle tickets
- Payments for admission to film shows or charity shows
- Payments for grave spaces
- Payments made for services such as saying prayers or the reservation of a space for ancestral worship
- Purchase of goods in bazaars
- Payments made to a church, a tax-exempt charity, through dropping cash in the donation bag during Sunday masses except where donation receipts could be produced to prove the amount of donation made by the claimant.
Amount of Allowable Deduction
The aggregate deduction of approved charitable donations cannot be less than $100. The aggregate deduction shall not exceed 35% of your income after allowable expenses and depreciation allowances or assessable profits. If you have more than one source of income and you have elected for personal assessment, the unused portion of approved charitable donations under a tax type (such as profits tax) may be deductible under personal assessment.
Lodging a Claim for a Deduction
To lodge a claim, you should enter the total amount of approved charitable donations made during the relevant year of assessment in your Tax Return – Individuals (BIR60). Donations already claimed in your spouse’s tax return should not be included.
Supporting Documents
You need not attach any documentary evidence to your tax return. However, to substantiate your claim and for verification of the amount later, you must ask for donation receipts from the tax-exempt charity or the Government, and should retain the receipts for a period of 6 years after the expiration of the year of assessment in which the payments were made. You are required to produce receipts if your case is selected for review.
Last updated 28.02.2022. Be sure to check the government’s official resources, in case of any updated policies, here.