What Activities Qualify for PIC?
What is PIC?
The PIC scheme supports investments in
Productivity and Innovation.
Businesses,
including sole-proprietors, can enjoy tax
savings in the form of Cash Payout and/or
Tax Deduction when they invest in any of
these six productivity improvement activities:
• Costs to acquire or lease PIC automation
equipment for your trade.
• PIC automation equipment refers to:
2. Specialised equipment that is approved by
IRAS for PIC on a case-by-case basis. The
criteria and application procedure are
available at www.iras.gov.sg (Businesses >
For companies>Productivity and Innovation
Credit>What qualifies for PIC> Application
for approval of Automation Equipment for
PIC).
Training of Employees
Acquisition
or Leasing of PIC
Automation Equipment
Acquisition of
Intellectual
Property Rights
Research and
Development
Activities
PIC Automation Equipment*
1. Automation equipment that are in the PIC
Automation Equipment List available at
www.iras.gov.sg
(Businesses
>
For
companies > Productivity and Innovation
Credit> What qualifies for PIC> Summary of
qualifying activities); or
Training of
Employees
Registration of Patents,
Trademarks, Designs
and Plant Varieties
Qualifying
Activities
• Computer
• Software
• Printers
• Scanners
• Point-of-sale system
• Personal Digital
Assistant
• Computer-aided
design system software
• Computer numerical
control (CNC) milling
machine
• External Training – Training of your employees
by external service providers.
Examples of Qualifying
Costs that Qualify
for PIC
• In-house Training – Training of your employees
by your in-house trainers and must be:
• External training course
fees
a. A Workforce Skills Qualification (WSQ)
training course accredited by the Singapore
Workforce Development Agency (WDA)
and conducted by a WSQ in-house training
provider;
• Salary and other
remuneration paid to
in-house trainers for
conducting the
training
b. A course approved by the Institute of
Technical Education (ITE) under the ITE
Approved Training Centre scheme;
• Rental of training
facilities
c. On-the-job training by an on-the-job training
centre certified by ITE.
d. With effect from YA2012, in-house training
not accredited/certified by WDA/ITE, is
subject to spending cap of $10,000 per YA*
Investment in Design
Projects Approved by
the DesignSingapore
Council
Examples of Automation
Equipment in the PIC
Automation Equipment
List (i.e. these qualify
for PIC)
• Training materials used
for the training
• Meals and
refreshments provided
during the Training
• Training
costs
incurred
by
sole-proprietor/partner under contract for
service do not qualify for PIC benefits. They are
business owners and not employees
• Registration costs of patents, trademarks,
designs and plant varieties.
• Your business must be the legal and economic
owner of the IPR.
• Costs in acquiring the legal and economic
ownership of the IPR for use in your trade. (Not
applicable to Sole-proprietorships)
• Qualifying costs exclude legal fees, registration
fees, stamp duty and other costs related to the
acquisition.
Examples of IPRs that
Qualify for PIC
• Patents
• Copyrights
• Trademarks
Research and Development (R&D)
Qualifying Costs
• R&D refers to any systematic, investigative and
experimental study that involves novelty or
technical risk carried out in the field of science
or technology with the objective of acquiring
new knowledge or using the results of the study
for the production or improvement of
materials, devices, products, produce, or
processes.
• Staff costs and
consumables for R&D
activities carried out
by your business
• R&D may be conducted by your business or
outsourced to an R&D organisation.
• R&D may be carried out in Singapore or
overseas. If the R&D is done overseas, it must
be related to your trade in Singapore.
• 60% of outsourced
costs or shared costs
deemed to be staff
costs and
consumables; other
percentage should be
substantiated by
supporting documents
• R&D cost sharing arrangement qualifies for PIC
with effect from YA 2012.
Approved Design Project
Qualifying Costs
• Approved Design Project is administered by
DesignSingapore Council.
• Staff cost of qualified
design professional
• The approved design activities may be
conducted by your business or outsourced to
an approved design service provider.
• 60% of payments to
outsourced approved
design service provider
will be deemed as cost
of qualified designers;
other percentage
should be
substantiated by
supporting documents.
• More details, including how to apply for
approval can be found on DesignSingapore
Council’s website at
http://designforenterprises.sg/pic.aspx.
* Cash conversion is on the full acquisition costs/registration costs of each
equipment/IPR, subject to the conversion cap.
Tax Deferral Option
*Note: Spontaneous consultation, day-to-day
problem-solving
or
meetings
and
coaching/mentoring
sessions
between
supervisors and subordinates are not considered
to be training.
Registration of Intellectual Property Rights*
(IPR)
Acquisition of Intellectual Property Rights *
Qualifying Costs
• Official fees paid to
respective Registry
• Professional fees for
registration of IPRs
For every dollar of your investment spent in any of the six qualifying activities in
accounting years 2011 to 2014, you can defer paying the same amount in tax (up to
$100,000) for the current Year of Assessment (YA). The tax deferred is due for
payment when the first assessment for the following YA is raised. This option is to help
businesses with their cashflow and investments in productivity.
More details on tax deferral option can be found on www.iras.gov.sg (Businesses >
For companies > Productivity and Innovation Credit> How PIC benefits you> Tax
Deferral Option).
How does PIC
benefit you?
On your spending for
accounting years 2010 to 2014
[Years of Assessment (YA)
2011 to 2015]
Payout Option
400%
Tax Deduction
*
You can enjoy 400% tax
deduction on up to
$400,000
of
your
investment spending each
year in each of the six
activities.
means
* This
deduction of
a
tax
up to $1.6
million ($400,000 x 400%) for
each activity per YA.
*
In addition, you can
combine your spending
across YAs for each activity
to enjoy the maximum PIC
benefits as follows:
YA
2011
& 2012
Cash
2013
to 2015
Combined $800,000
spending
($400,000 x 2)
cap per
activity
$1,200,000
Maximum $3.2 million
tax
($800,000
deduction at 400%)
per activity
$4.8 million
($400,000 x 3)
($1.2 million
at 400%)
can apply to convert
* You
up to $100,000 of your total
investment spending in all
six
activities
into
a
non-taxable cash payout
instead of claiming tax
deduction. This option may
be more beneficial for
businesses with low or no
taxable income.
How do I apply?
400%
Tax
Deduction
How to Claim/Apply
When to Submit
Claim tax deduction in “Allowable Business
Expenses” of the 4-line statement in your
Income Tax Return (Form B/Form P).
Submit Income Tax Return and PIC
Declaration Form by the filing due
date of 15 April
Submit PIC Enhanced
Allowances/Deduction Declaration Form
for Sole-proprietors & Partnerships
www.iras.gov.sg
Quick Links > Forms>Individuals
Cash
Payout
Submit PIC Cash Payout Application Form
Tax
Deferral
Submit the PIC Tax Deferral Form.
www.iras.gov.sg
Quick Links > Forms > Individuals
www.iras.gov.sg
Quick Links> Forms > Individuals
• A sum of $60,000 (60% x
$100,000) for each YA
from YA 2013 to YA 2015;
To qualify for cash payout, your
business must:
• employ at least three local
employees (Singapore Citizens
or Permanent Residents with
CPF contributions, excluding
sole-proprietors and partners
under contract for service); and
• carry on business operation in
Singapore.
Note: Please deduct any grant or subsidy
given on your investment and claim PIC
benefits only on the net spending.
Any time after incurring qualifying
expenditure but not later than the
end of the current financial
year-end.
Sole-Proprietorship A is in the manufacturing business. In year 2012, it
invested in a Computer Numerical Control (CNC) cutting machine and
sent staff to attend external courses. With the new automated machine,
the business is able to automate some of its manufacturing processes
and increase production capacity. The external courses help to
upgrade the staff’s competency level and improve productivity.
The expenditure incurred is as follows:
maximum cash payout
* The
is:
• A total of $60,000 for YA
2011 and YA 2012
combined
(30%
x
combined
spending
cap of $200,000).
Any time after the end of your
financial quarter(s), but not later
than the filing due date of the
Income Tax Return (Form B/ Form P)
Total qualifying
PIC costs:
BILL
$23,000
Sole-Proprietorship A
$20,000
+
$3,000
= $23,000
Case
Study
Assuming that the
Sole-Proprietor’s
TAX STATEMENT
chargeable income
[CI] for YA 2013 before TAX PAYABLE
deducting equipment
and training cost is
$200,000. His tax
payable* is $20,750.
$20,750
Acquisition of PIC automation equipment: $20,000 (CNC cutting machine)
Training: $5,000 (Only $3,000 incurred on training of employees. The balance of
$2,000 was for training of the Sole-Proprietor)
The Sole-Proprietor will
receive a cash payout of
$13,800 ($23,000 x 60%).
He will still need to pay
tax of $20,750. Effectively,
his PIC benefit is $6,950
($20,750-$13,800).
PIC BENEFIT
$6,950
($20,750-$13,800)
He will be able to claim a total tax
allowance of $92,000 ($23,000 x 400%)
and his CI will be further reduced to
$108,000 ($200,000 - $92,000). In this
case, his tax payable* will be $6,570.
Effectively, his PIC benefit will be
$14,180 ($20,750-$6,570).
If the Sole-Proprietor opts
for cash payout for the
total expenditure of
$23,000, the equipment
and training costs cannot
be claimed as a deduction
against his income.
PIC BENEFIT
$14,180
($20,750-$6,570)
Alternatively, the
Sole-Proprietor
can claim tax
deduction on
the expenditure
incurred.
Apply for
Cash
Payout
Claim
Tax
Deduction
*Tax payable is calculated based on the progressive individual income tax rates.
For more information on PIC, contact us:
Helpline for Self-employed / Partnership:
(65) 6351 3534 | Email: picredit@iras.gov.sg | Website: www.iras.gov.sg
Businesses > For companies> Productivity and Innovation Credit
6 ways to boost
your tax savings
with Productivity &
Innovation Credit (PIC)
(For Sole-Proprietors and Partnerships)