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    Pic + Scheme for SMEs

    June 6, 2018

June 6, 2018

Pic + Scheme for SMEs

PIC+ Scheme New!

Newly announced during the recent Budget 2014, from financial YAs 2015 to 2018, qualifying businesses are able  enjoy 400% tax deductions/allowances on up to $600,000 (instead of $400,000 for the older scheme) of their expenditure per year in each of the six qualifying activities under the PIC+ scheme. This is an additional boost of $200,000 from the previous scheme.

The annual expenditure cap of $600,000 may be combined as follows:

IRAS_1

Find out more about the PIC+ Scheme for SMEs.

* Only if you are carrying on a trade or business for the relevant YAs. Otherwise, the combined cap is reduced accordingly.

How to claim tax deduction

Businesses can make the claim for deductions/allowances in their income tax return for the relevant YA by the filing due date (15 Apr for sole-proprietorship and partnership; 30 Nov for company).

Sole-proprietors and partnerships also have to submit the PIC Enhanced Allowances/Deduction Declaration Form for Sole-Proprietors and Partnerships (100KB) together with their income tax return.

*Disclaimer: Information is accurate as taken from IRAS website on 06 March 2014.

Cash Payout Option

How it works

Eligible businesses can apply to convert up to $100,000 of their total expenditure for each YA in all the six qualifying activities into a non-taxable cash payout. The cash payout rate is at 60% of the expenditure incurred.

The cash payout option is to support small and growing businesses which may be cash-constrained to innovate and improve productivity.

The maximum cash payout is calculated as follows:

IRAS_2

* Only if you are carrying on a trade or business for the relevant YAs.  Otherwise, the combined cap is reduced accordingly.

Conditions for cash payout

Businesses eligible to apply for the cash payout are sole-proprietorships, partnerships, companies (including registered business trusts) that have:

  • incurred qualifying expenditure and are entitled to PIC during the basis period for the qualifying YA;
  • 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-employees condition if it contributes CPF on the payroll of at least 3 local employees in the relevant month(s).

New! From YA 2014, for the purpose of fulfilling the 3-local employee condition, individuals deployed under a centralized hiring arrangement* will be regarded as employees of the business where these individuals are deployed, subject to the following qualifying conditions:

  • The claimant is able to produce supporting documents on the recharging of employment costs by a related entity, in respect of employees working solely in the claimant entity;
  • The corporate structure and centralized hiring practices are adopted for bona fide commercial reasons; and
  • The employee whose cost has been recharged will not contribute to the requisite headcount of the related party (which bore the upfront manpower costs).

* Some examples of centralized hiring arrangements include deployments where the HR function of a group of companies is centralized in a single entity, with the staff costs (including training expenditure) allocated to the respective entities, or a secondment, where employees are seconded to work for a related company. Once seconded, the staff costs are fully recharged to the related company.

What to note when applying for cash payout

  • Once the qualifying expenditure is converted to cash, it cannot be claimed as tax deductions/allowances.
  • Election to convert qualifying expenditure to cash is irrevocable.
  • The minimum qualifying expenditure for each application is $400.
  • Qualifying expenditure to be converted to cash is the amount net of grant or subsidy by the Government or any statutory board, and includes grant or subsidy pending approval.

How to apply for cash payout

Businesses can apply for cash payout according to these timelines:

IRAS_3

* Income tax return filing due dates – 15 Apr for sole-proprietorship and partnership; 30 Nov for company.

To apply for cash payout, please complete the new PIC Cash Payout Application Form. If you are claiming cash payout on PIC IT and Automation Equipment acquired under a hire-purchase agreement entered into during the basis period for YAs 2013 to 2015, please also complete the Hire-Purchase Template (80KB) .

The new PIC Cash Payout Application Form is an online form with validation checks to minimize errors in form completion and ensure that all relevant information is provided. It also has an iHelp facility <i> to provide guidance on how to fill up the form. This is to facilitate faster processing of the application forms as it minimizes the need for IRAS to seek clarification on the application forms. In turn, this will allow the claimants to receive the cash payout more quickly.

Please read the Essential Information to Note (136KB) before completing the online PIC Cash Payout Application Form. You may also wish to view the user guide (1.84MB) for this form.

How to Submit PIC Cash Payout Application Form
After completing the form online, please print and submit the original signed form (i.e. not photocopied copy), together with the hire-purchase template (where applicable), to IRAS at the following address:

Inland Revenue Authority of Singapore
55 Newton Road
Revenue House
Singapore 307987

After Submitting PIC Cash Payout Application Form
The cash payout will generally be made by IRAS within three months of receipt of the properly completed application form, relevant annexes and hire-purchase template.

In instances where the application forms are incomplete, IRAS will reject the application forms with reasons stated, and the claimants will be requested to re-submit a properly completed application form. Examples of incomplete applications are forms that are not signed by authorised persons, forms submitted without the relevant annexes, photocopied/ faxed copies of the forms (i.e. we need the original copies) and forms with missing information. Please exercise due care when completing and submitting the cash payout application.

Please also note that IRAS may select PIC applications for further review, even after the cash payout has been made.

*Disclaimer: Information is accurate as taken from IRAS website on 06 March 2014.