What is Chinese Development Assistance Council (CDAC)?
The Chinese Development Assistance Council (CDAC) is a self-help group (SHG) serving the less successful individuals and families in the Chinese Community. The CDAC Fund is used to fund CDAC’s programmes and assistance schemes to help the students, workers and families from the lower income groups overcome their challenges and achieve social mobility.
With the Vision of becoming a cohesive and resilient community that strives for upward social mobility through self-help and mutual support, the key thrusts for CDAC are social mobility, community ownership and effective integrator.
From 1 September 1992, under the Central Provident Fund Act (Chapter 36, Section 76(3)), all working Chinese Singapore Citizens and Permanent Residents will contribute monthly to the CDAC Fund according to their wage level. On the other hand, for Work pass holders and students on internship programmes are not required to contribute.
Is it compulsory to contribute? Under the Central Provident Fund Act (Chapter 36, Section 76(3)), employers are required to automatically deduct contributions from the wages of their Chinese employees, unless the employees opt-out from the scheme.
What are the rate for the CDAC Fund monthly contribution? Rate are shown as followed:
Rate effective on 1 January 2015
|*Gross Wages/Month||Minimum Monthly Contribution to CDAC|
|> $2,000 to $3,500||$1.00|
|> $3,500 to $5,000||$1.50|
|> $5,000 to $7,500||$2.00|
*Gross wages refer to all remuneration in money or wages due or granted to an employee in respect of his employment, including overtime pay, allowances (e.g. food, shift or transport allowances), commission and bonus.
One thing that everyone concern is that are the contributions tax deductible? Well, CDAC has been granted status of an Institution of a Public Character (IPC). All of the donation to the CDAC Fund made from 1 January 2009 to 31 December 2015 is entitled to 2.5 times tax deduction. The tax deduction will be automatically reflected in your IR8A statement.
As all of us know that preparing payroll and payment of salary is one of the most important tasks for all business. The process can be complicated further and be more time-consuming due to additional components such as benefits, allowances, deductions, government remittance, etc. Likewise, the auto deduction of the CDAC Fund monthly needs to be done in each payroll. Hence, it is normal to see so many SMEs choose to outsource their payroll function to accounting firms. The well-trained payroll specialist at 3E Accounting surely can assist you in payroll services. If you wanted to know more information, please feel free to contact us today!