I was teaching a student about tax because it's covered in the syllabus. The syllabus is actually quite simplistic, so I took the liberty to incorporate real life elements into the picture so as to show her what is the tax situation here in Singapore. I mentioned about the use of donations to reduce chargeable income and it carries with it a 2 times deduction to chargeable income. Well, I was wrong...they changed that to 2.5 times already and apparently I wasn't updated about that information. While teaching her, I was wondering if it's worth it to make donations to IPC such that your tax amount is reduced to more than the amount donation, including all the 2.5 times mutiplier.
Here's the rates of tax for year of assessment 2014:
As you can see, the top tax rates for the highest income bracket is 20%.
For every $100 of donations, you get 2.5 times deduction to chargeable income, so that's a $250 deduction off your chargeable income. Below is the table that shows the amount of deduction to your taxable income, taking into the tax rates for different income brackets.
|Chargeable Income (up to)||Income bracket||Deduction to tax|