Productivity & Innovation Credit (PIC)
Rush to your desk !
The annual Form C tax filing dateline is coming, i.e. 30th November, will be 15th December if e-file !
For many, this dateline means the last date to claim PIC for qualified PIC expenses incurred up to 31 Dec of last year.
Suddenly, my office was swamped with telephone enquiries on annual Form C Tax Filing & PIC Claim in the last 2 weeks of this November month.
For those who are still scratching your head, just like 15th April date being the annual personal income tax filing dateline, this 30th November (will be 15th December if e-file) is the annual tax filing dateline for companies, & hence also the last date for any PIC Claim for prior fiscal year’s PIC qualified expenses.
All businesses, including sole proprietorships, partnerships, companies, registered branches & subsidiaries of a foreign parent or holding company, are eligible for PIC.
There are 6 categories of PIC Claim :
1. IT & Automation equipment
2. Training of Employees
3. Intellectual Property Rights
4. Registrations of Patent, Trademark, Design
5. R&D
6. Investment in Design Projects
Businesses may enjoy PIC benefits on the cost incurred to acquire or lease equipment that are in the “PIC IT & Automation Equipment List”.
For equipment that are not in the PIC IT & Automation Equipment List but which automate or mechanise the business processes & enhance productivity, you may apply to IRAS for approval on a case-by-case basis.
Some questions that IRAS may ask for “case-by-case” basis :
1. Function and specification (Detailed explanation of what it does)
2. What are the work processes with the equipment? Highlight the automation/mechanisation processes which improve processes . What are the benefits over other similar equipment ?
3. Productivity benefits (reduced man hours? More output per unit time?)
It would be good to be prepared with the above details in case of query by IRAS.
Claiming for PIC can be in 2 forms :
1. Enhanced Tax Deductions or
2. Cash Payout
2 key conditions must be fulfilled for claiming either form :
1. Carries on active business operations in Singapore
2. Incurred qualifying expenditure and are entitled to PIC during the basis period of qualifying YA.
3 Conditions for claiming PIC Cash payout :
1. The company is carrying on a business
2. There must have been three local employees in the relevant quarter; this is assessed by review of CPF contributions
3. The equipment is in use at the time of electing for the cash payout
Please take note :
From 1 Aug 2016, the following changes to PIC Cash Payout Scheme will take effect:
1. Reduction of cash payout rate for qualifying expenditure incurred on or after 1 Aug 2016 from 60% to 40% (the cash payout rate is not determined by the date of submission of the cash payout application); &
2. Compulsory e-filing of cash payout applications. Hardcopy applications Will Not be accepted from 1 Aug 2016.
Penalties :
1. IRAS takes a serious view of any non-compliance or abuse of the scheme. Offenders convicted of PIC fraud will have to pay a penalty of up to 4 times the amount of cash payout fraudulently obtained, & a fine of up to $50,000 &/or face jail of up to 5 years. This includes any person who wilfully assists another person to obtain a cash payout or PIC bonus which he is not entitled to.
2. IRAS imposes penalties on intermediaries (including vendors & consultants) who know or have reasonable grounds to believe that the arrangements they are promoting are abusive PIC arrangements. Convicted offenders need to pay a fine of up to $10,000 &/or face imprisonment of up to three years.
Feel free to contact me if you have anything unclear or would like to find some help in this regard.
Good Luck !
If you need help, feel free to contact us at :
(M) +65 90880669
