Approved Charitable Donations

Donations to tax-exempt charities or to Government 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. Here you can learn 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 or to the Government for charitable purposes. You can also claim a deduction for any approved charitable donation made but not claimed by your spouse.

Example: A married couple not living apart may claim deductions for approved charitable donations made by his/her spouse

Mr and Mrs A

Computation of Net Chargeable Income for Year of Assessment 2015/16

 

Mr A

Mrs A

 

$

$

Salaries income

350,000

300,000

Total approved charitable donations

150,000

20,000


Calculation of net chargeable income

Mr A
 

Income

350,000

 

Less: Outgoings and expenses

     2,000

 

 

348,000

 

Less: Approved charitable donations (Note 1)

121,800

 

 

226,200

 

Less: Basic allowance

120,000

 

Net chargeable income

106,200

 


Mrs A

Income

 

300,000

Less: Outgoings and expenses

 

     1,000

 

 

299,000

Less: Approved charitable donations (Note 2)

 

   48,200

 

 

250,800

Less: Basic allowance

 

120,000

Net chargeable income

 

130,800


Note 1: The maximum amount of approved charitable donations that can be allowed to Mr A is restricted to $121,800 ($348,000 x 35%), hence Mr A can claim $121,800 in his tax return and ask Mrs A to claim the unused balance.

Note 2: Mrs A can claim the unused portion of approved charitable donations made by Mr A, i.e. $28,200 ($150,000 - $121,800), in addition to the donation of $20,000 made by her.

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.

Example: When an individual taxpayer has more than one source of income, the unused portion of approved charitable donations under a tax type may be deductible under Personal Assessment


Mr C

Computation of Net Chargeable Income under Personal Assessment for year of assessment 2015/16
 

 

$

$

$

Salaries income before deduction of approved

charitable donations

 

 

400,000

Business profits after deduction of $50,000 approved

charitable donations

 

 

150,000

Property income after deduction of statutory

allowance under property tax

 

 

100,000

Total approved charitable donations

 

 

250,000

Calculation of Net Chargeable Income under Personal Assessment 

 

Salaries income

 

400,000

 

 

Business profits

200,000

 

 

 

Less: Donations already claimed under Profits Tax

   50,000

 

 

 

Assessable profits

 

150,000

 

 

Property income

 

100,000

 

 

Total income

 

650,000

 

 

Less: Donations (Note)

 

195,000

 

 

 

 

455,000

 

 

Less: Basic allowance

 

120,000

 

 

Net chargeable income

 

335,000

 

Note:

Total income before deduction of approved charitable donations
= $400,000 + $200,000 + $100,000
= $700,000

Maximum amount of deductible approved charitable donations
= $700,000 x 35%
= $245,000

Deductible approved charitable donations under Personal Assessment
= $245,000- $50,000
= $195,000

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.

Checking Whether Donations are made to approved charities

You can check whether a charity is a tax-exempt one through the following links.

Online search for tax-exempt charitiesList of tax-exempt charities (pdf file)
Last revision date: May 2016