Does donation really reduces tax?

[zoossh]

http://www.rikvin.com/taxation/singapore-income-tax-calculator/

I use calculator above and increases the donation figure by thousands but tax only drop by a few hundred. Did I miss something?

 

[limster]

If I key in $1,000,000 income, Income tax is $178,350

If I key in $100,000 donation, Income tax is 128,350 , which is $50,000 less.

Meaning if you donate $100,000, the government gives $50,000 back. I don't think other countries are as generous.

 

[djchris]

Donations to registered charities give you tax deductions for your taxable income. Not income tax.

So you don't see the real benefit in income tax reduction unless that donation helped to bring your taxable income down to a lower tax rate.

 

[anfielder]

Donations to registered charities give you tax deductions for your taxable income. Not income tax.

So you don't see the real benefit in income tax reduction unless that donation helped to bring your taxable income down to a lower tax rate.

I think you may have misunderstood the way tax is applied? If your top tax rate is 20%, that rate is only applied the portion of your taxable income that exceeds $320k and doesn't affect the tax payable for your first $320k.

 

[anfielder]

http://www.rikvin.com/taxation/singapore-income-tax-calculator/

I use calculator above and increases the donation figure by thousands but tax only drop by a few hundred. Did I miss something?

Tax deductible is only 250% of donation amount leh.. so unless your tax rate is 40% (which doesn't exist in SG), the reduction in tax will be less than your donation amount.

 

[djchris]

I think you may have misunderstood the way tax is applied? If your top tax rate is 20%, that rate is only applied the portion of your taxable income that exceeds $320k and doesn't affect the tax payable for your first $320k.

I think we are just looking at different angles.

How I see it is that if my taxable income for 2015 is 350k, I could donate enough to reduce the taxable income to 320k and below to avoid the tax for the tier above 320k which is quite hafty.

 

[Sunnydae]

If you donate a thousand and your tax rate is 14% (for that bracket),
you save 2.5k x 20% = $350

Seems ok to me, the lower your income tax rate, the less money you save

I noticed the calculator didnt include the 250% tax reduction for donations so your final tax savings should be multiplied by 2.5 to be correct.

 

[The Accountant]

If you donate a thousand and your tax rate is 14% (for that bracket),
you save 2.5k x 20% = $350

Seems ok to me, the lower your income tax rate, the less money you save

I noticed the calculator didnt include the 250% tax reduction for donations so your final tax savings should be multiplied by 2.5 to be correct.

If I am not mistaken if he is computating for trade income, he needs to add back The donation expense in order to arrive to assessable income, then less 250%(300% in YA2016) to get the chargable income. The tax rate shall be use on the chargable income.

 

[cscs3]

Best donation is to donate to your own CPF account. $7000 and you get both tax deduction and high interest rate in your own CPF account.

 

[zoossh]

If you donate a thousand and your tax rate is 14% (for that bracket),
you save 2.5k x 20% = $350

Seems ok to me, the lower your income tax rate, the less money you save

I noticed the calculator didnt include the 250% tax reduction for donations so your final tax savings should be multiplied by 2.5 to be correct.

no. the calculator had some instructions when u hover over the donations area. if u donate 100, u key in 250. i did that already.

tried a few permutations, i think if u donate 1000 (key in 2500), get back only 500.

i also tested the tier to see if there is a difference between above 320k and below 320k chargeble income. still the same. so there dun seem to be a difference in fitting a threshold such that u drop into another category.

in fact, there might even be a limit to it. i tested on a net tax payable of 42000, then donate 40000, end up still got to pay 35000 of tax.

 

[zoossh]

Best donation is to donate to your own CPF account. $7000 and you get both tax deduction and high interest rate in your own CPF account.

already cpf 7000 and srs 12750.

life insurance claim no matter what is up to 5k rite?

 

[highsulphur]

already cpf 7000 and srs 12750.

life insurance claim no matter what is up to 5k rite?

You cannot claim life insurance if you are contributing to cpf

 

[zoossh]

You cannot claim life insurance if you are contributing to cpf

dunno for the past few years, they autocalculate for mee, insai got give a figure for life insurance relief. i didnt change it.

 

[chiokcc]

A side track ...

I called in the various Mediacorp charity shows to donate $$ last year. I have not seen the 2.5X donated amount reflected in my Income tax during filing earlier this year.

So, I should expect to see the deduction in the initial assessment?

 

[anfielder]

A side track ...

I called in the various Mediacorp charity shows to donate $$ last year. I have not seen the 2.5X donated amount reflected in my Income tax during filing earlier this year.

So, I should expect to see the deduction in the initial assessment?

Did you check whether the organisations you donated to are IPCs?

 

[limster]

A side track ...

I called in the various Mediacorp charity shows to donate $$ last year. I have not seen the 2.5X donated amount reflected in my Income tax during filing earlier this year.

So, I should expect to see the deduction in the initial assessment?

You already asked this question last month and people say not tax deductible. Why you ask again?
If you don't believe the answer the first time, then go and call IRAS lor?

http://forums.hardwarezone.com.sg/money-mind-210/iras-srs-4981448.html

 

[wts2013]

If u want to donate to charity, dun ask for reward, to get good karma, hahaha

If u want to reduce your tax, "donate" to your loved ones' CPF lor, or your own CPF, hahaha

 

[zoossh]

If u want to donate to charity, dun ask for reward, to get good karma, hahaha

If u want to reduce your tax, "donate" to your loved ones' CPF lor, or your own CPF, hahaha

no, i just want to know how things work and about the myth that rich people save tax by donating. apparently it just doesnt.

 

[chiokcc]

Did you check whether the organisations you donated to are IPCs?

I assumed Mediacorp's show should be under IPC?

 

[wts2013]

no, i just want to know how things work and about the myth that rich people save tax by donating. apparently it just doesnt.

Yes, they do pay less tax, they prefer to donate to charity than donate more to gahmen lor, so long they pay less regardless of quantum, that amt saved is considered donated to charity not gahmen lor, hahaha