1. What is PIC and who is eligible for PIC?
PIC Grants, in short for, Productivity and Innovation Credit was initiated in Singapore in the 2010 Budget in order to offer considerable tax deductions for investments in a number of activities down the value chain of innovation. PIC grants are aimed at heartening small to standard enterprises to exploit the PIC schemes in order to invest in innovation as well as productivity All business are eligible for PIC, if they have incurred expenditure in any of the six qualifying activities. Singapore registered branches and subsidiaries of a foreign parent or holding company are also eligible for PIC This includes commission based agents who are individual in various professions such as – – Real Estate Agents – Insurance Agentss
2. What types of claim options are available ?
a. Tax Deduction / Cash Payout
Your business can enjoy 400% tax deductions/ allowances and/or 60% cash payout for investment in innovation and productivity improvements under the Productivity and Innovation Credit (PIC) scheme. The tax benefits under PIC are available from Years of Assessment (YAs) 2011 to 2018, for investment in any of the six qualifying activities.
b. Additional PIC Bonus
From YAs 2013 to 2015, your business can also enjoy a PIC Bonus, a dollar-for-dollar matching cash bonus given on top of the existing 400% tax deductions/ allowances and/or 60% cash payout. Find out more about the PIC scheme in the table below.
|What Qualifies for PIC||How PIC Benefits You||How to Claim|
|Invest in Six PIC Qualifying Activities||
|Most Commonly Claimed Activity||What Equipment Qualifies||How to Apply|
|IT and Automation Equipment||
3. Qualifying Conditions
- incurred at least $5,000 in PIC-qualifying expenditure* during the basis period for the YA in which a PIC Bonus is claimed;
- active business operations in Singapore; and
- at least 3 local employees (Singapore citizens or Singapore permanent residents with CPF contributions) excluding sole-proprietors, partners under contract for service and shareholders who are directors of the company. A business is considered to have met the 3-local-employee condition if it contributes CPF on the payroll of at least 3 local employees:
o Where 400% tax deductions/allowances on qualifying PIC expenditure is claimed – in the last month of the basis period for the YA to which the deductions/allowances relates. o Where PIC cash payout on qualifying PIC expenditure is claimed – in the last month of the quarter or combined consecutive quarters to which the cash payout option relates.
4. Computing PIC Bonus
You will receive an equal amount in PIC bonus on every dollar that you spend on qualifying activities, subject to a cap of $15,000 over YAs 2013 to 2015. Example
|YA 2013||YA 2014||YA 2015|
|Qualifying PIC Expenditure||$6,000||$3,000||$12,000|
|PIC Cash Payout (1)||$3,600 ($6,000 x 60%)||$1,800 ($3,000 x 60%)||$7,200 ($12,000 x 60%)|
|PIC Bonus||$6,000||$0 (2)||$9,000 (3)|
|Total PIC Benefits||$9,600||$1,800||$16,200|
(1) Computed based on 60% of qualifying PIC qualifying expenditure. In this example, the business applies for cash payout for YAs 2013 to 2015. Businesses that claim 400% tax deductions/allowances in any or all the three YAs will also be eligible for the PIC Bonus. (2) PIC Bonus is not given as qualifying PIC expenditure incurred during YA 2014 is less than $5,000. (3) PIC Bonus cap of $15,000 less PIC Bonus given in YA 2013 of $6,000.
5. Payment of PIC Bonus
Businesses do not need to apply for the PIC Bonus.
a. Where 400% tax deductions/allowances is claimed in the income tax return
IRAS will compute the amount of PIC Bonus for each YA upon filing of the income tax return*. Most businesses can expect to receive the PIC Bonus within three months from filing their tax return and as long as all requisite information has been submitted with the tax return. * Sole-proprietors and partnerships also have to submit the PIC Enhanced Allowances/Deduction Declaration Form for Sole-Proprietors and Partnerships (99KB) together with their income tax return.
b. Where PIC cash payout is claimed via the PIC Cash Payout Application Form
IRAS will compute the amount of PIC Bonus upon approval of the PIC cash payout claim* submitted via the PIC Cash Payout Application Form. IRAS will generally approve the cash payout claim within three months from the date of receipt of the application, provided all requisite information is submitted at the time of application. The PIC Bonus will be paid within three weeks after the cash payout claim has been approved. * Businesses can apply for PIC cash payout up to four times a year (i.e. after the end of each quarter or combined consecutive quarter