Frequently Asked Questions on Cash Payout Option under the Productivity and
Innovation Credit (PIC) Scheme (“PIC Cash Payout”)
(Updated as at 19 Dec 2014)
A1. Overview of the cash payout scheme .................................................................................................... 3
1.
What is the cash payout? .................................................................................................................. 3
2.
What is the qualifying period for the cash payout? .......................................................................... 3
3.
How is the cash payout cap applied? ................................................................................................ 3
4.
What is the maximum amount of cash payout I can receive? .......................................................... 3
Revised on 27 Nov 2014!
5.
Who is eligible to apply for the cash payout?
........................................................ 3
6.
I was granted a waiver of income tax return (Form C/Form C-S) submission by IRAS but I have recommenced business and would like to apply for cash payout. What should I do?........................ 4
7.
If my business does not meet the qualifying condition of having 3 local employees during the
relevant financial period for Year of Assessment 2013 for PIC cash payout, can we make the claim
for the YA 2013 incurred expenditure in subsequent YAs when we meet the qualifying condition?
4
8.
Do I need to make CPF contributions on my local employees for all 12 months of each YA? .......... 4
9.
I have incurred wage costs on both my Singaporean and non-Singaporean employees. Am I
eligible to apply for the cash payout? ............................................................................................... 4
10.
I have both full- time and part- time employees. Am I eligible to apply for the cash payout? ......... 5
11.
For YA 2016, my company intends to employ two more employees on part-time basis for only
three months, and contribute to the CPF for these employees, to qualify for the PIC cash payout.
The company already has one local employee (with CPF contributions). Can the company qualify
for PIC cash payout? .......................................................................................................................... 5
12.
I am self-employed and have contributed to my Medisave Account. Am I considered an employee
of the business? ................................................................................................................................ 5
13.
Is the cash payout taxable? ............................................................................................................... 5
14.
Can I convert the qualifying expenditure under PIC into a cash payout if my business still has
taxable income? ................................................................................................................................ 5
15.
Is partial conversion of the qualifying expenditure into cash payout allowed? ............................... 5
16.
Can PIC IT and Automation Equipment acquired on hire purchase (HP) qualify for cash payout? .. 6
17.
Can I claim tax deductions or allowances in my income tax return after the expenditure has been
converted into a cash payout? .......................................................................................................... 7
A2. Applying for the cash payout .................................................................................................................. 7
18.
How do I apply for the cash payout? ................................................................................................ 7
19.
My business’ financial year ended on 31 Mar 2014 (YA 2015). When can I apply for the cash
payout? If so, when will I receive the cash payout?......................................................................... 7
20.
My business’ financial year ended on 31 Mar 2014 (YA 2015). I have made a claim and received
my cash payout for qualifying expenditure (Items 1 and 2) incurred in financial quarter, Oct 2013
to Dec 2013. I omitted to make a claim for a qualifying expenditure (Item 3) incurred in the same
quarter i.e. Oct 2013 to Dec 2013 and want to make a claim for item 3. Can I do it and if so, how?
8
21.
I am submitting my company’s Estimated Chargeable Income (“ECI”) soon. Do I have to submit
any forms (for purposes of PIC) together with the ECI? ................................................................... 8
22.
Can I submit a facsimile copy of the Cash Payout Application Form to IRAS? .................................. 8
For sole-proprietorships ....................................................................................................................................... 8
23.
When can I submit my claim for cash payout if I am a sole-proprietor with multiple soleproprietorships? ................................................................................................................................ 9
24.
If I have more than one sole-proprietorship, how many claim forms must I submit?...................... 9
25.
I am not required to file certified statement of accounts for income tax purposes for both my
sole-proprietorship and partnership as both businesses have revenue of less than $500,000 each.
Do I have to submit certified statement of accounts if I wish to apply for the cash payout?........... 9
26.
If a sole-proprietorship is owned by a company (not an individual) and the PIC qualifying
expenditure was incurred by the sole-proprietorship, which entity should fulfil the 3-local-
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employee condition in order to qualify for PIC cash payout? The company or the soleNew!
…………………………………………………………..……….………………………………………………..9
proprietorship?
A3. Receiving the cash payout ...................................................................................................................... 9
27.
Will the cash payout be used to offset my tax arrears? .................................................................... 9
28.
When will I receive the cash payout? ............................................................................................... 9
29.
How will the payment of the cash payout be made? ..................................................................... 10
30.
My business uses different bank accounts for GIRO payment of income tax and GST. In which
bank account will cash payout be credited to? ............................................................................... 10
31.
What will happen in the event that the GIRO crediting is not successful (e.g. bank account is
closed)? ........................................................................................................................................... 10
32.
I have misplaced the cheque for the payment of cash payout. What should I do? ........................ 10
A4. Recovery of the cash payout................................................................................................................. 10
33.
Under what circumstances do I have to repay the cash payout? ................................................... 10
34.
How do I inform IRAS if I dispose of an equipment/IPR in respect of which a cash payout was
claimed within the 1 year holding period? ..................................................................................... 10
35.
How is the recovery of cash payout on disposed IPRs computed? ................................................. 11
36.
Is there a penalty for disposing a piece of equipment for which cash payout was claimed within
the holding period? ......................................................................................................................... 11
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A1. Overview of the cash payout scheme
1. What is the cash payout?
To support small but growing businesses which may be cash-constrained in innovating and
improving productivity, eligible businesses can opt to convert qualifying expenditure to a nontaxable cash payout subject to a cap (“cash payout cap”) as follows:
YA
2011 to 2012
Cash Payout Rate
30%
2013 to 2018
60%
Expenditure Cap
$200,000 over 2 YAs combined
Maximum Payout
$60,000 over 2 YAs
$100,000 per YA (cannot be
combined across YAs)
$60,000 per YA
2. What is the qualifying period for the cash payout?
The cash payout option is available from YA 2011 to YA 2018.
3. How is the cash payout cap applied?
For sole-proprietorships and companies (including registered business trusts), the cap is applied
at the individual or company level; for partnerships, the cap is applied at the partnership level.
4. What is the maximum amount of cash payout I can receive?
For YA 2011 and YA2012, you can convert qualifying expenditure up to $200,000 (but not less
than $400 for each YA) taken together for the 2 YAs at the rate of 30% for all six qualifying
activities. This means you can opt for a total cash payout of up to $60,000 for two YAs combined.
For YA 2013 to YA 2018, you can convert qualifying expenditure up to a cap of $100,000 for each
YA (but not less than $400) for all six qualifying activities taken together at the cash conversion
rate of 60%. This means you can opt for a total cash payout of up to $60,000 for each YA.
5. Who is eligible to apply for the cash payout? Revised on 27 Nov 2014!
Sole-proprietorships, partnerships and companies (including registered business trusts) are
eligible as long as they:
i)
Incurred* the qualifying expenditure and are entitled to PIC during the basis period for the
qualifying YA;
ii) have active business operations in Singapore; and
iii) employ at least 3 local employees (Singapore Citizens or Permanent Residents with CPF
contributions) excluding sole-proprietors, partners under contracts for service and
shareholders who are directors of the company.
*An expense is incurred when the legal liability to pay has arisen, regardless of the date of actual payment of
the money. For more information and examples of when an expense is considered incurred, please refer
to Examples of when an expenditure is considered incurred.
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6.
I was granted a waiver of income tax return (Form C/Form C-S) submission by IRAS but I have
re-commenced business and would like to apply for cash payout. What should I do?
If your company has re-commenced business, you are required to notify IRAS immediately by
completing and submitting the form "Request for Income Tax Return (Form C/ Form C-S) and
Notification of New Accounting Year-End". Please note that failure to give notice of
chargeability is an offence under Section 94A of the Income Tax Act. However, if you have not
done so and would like to apply for cash payout, please submit this form together with the PIC
cash payout application form to avoid any delay in the processing of the cash payout.
7.
If my business does not meet the qualifying condition of having 3 local employees during the
relevant financial period for Year of Assessment 2013 for PIC cash payout, can we make the
claim for the YA 2013 incurred expenditure in subsequent YAs when we meet the qualifying
condition?
No. PIC cash payout is given on qualifying expenditure incurred during the basis period of the
YA and business must have 3 local employees during the relevant month(s) of the YA (refer to
Question 8 for more information on how to determine the relevant month(s)). For example, if
the business had only 2 local employees in YA 2013 during which the qualifying expenditure was
incurred, it will not be eligible for cash payout. If your business subsequently has 3 local
employees in the relevant month(s) in YA 2014, it can claim cash payout on qualifying
expenditure incurred in YA 2014. However, it cannot claim cash payout for the YA 2013
expenditure.
8.
Do I need to make CPF contributions on my local employees for all 12 months of each YA?
No, these contributions do not need to be made for all 12 months of the YA. To qualify for the
cash payout, businesses must have contributed CPF on the payroll of at least 3 local employees
as follows:
Year of Assessment
(YA)
2011 and 2012
2013 to 2015
Relevant month(s) for determining 3-local-employee condition
In the last month of the basis period for the qualifying YA.
In the last month of the quarter or combined consecutive
quarters to which the cash payout option relates.
Please see Worked Examples for YAs 2013 to 2015.
2016 to 2018
For all three months in the quarter or last three months of the
combined consecutive quarters to which the cash payout option
relates.
Please see Worked Examples for YAs 2016 to 2018.
9. I have incurred wage costs on both my Singaporean and non-Singaporean employees. Am I
eligible to apply for the cash payout?
Only employees who are Singaporeans and Permanent Residents will be considered when
determining the number of qualifying local employees. Your non-Singaporean employees will
not be taken into consideration.
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10. I have both full- time and part- time employees. Am I eligible to apply for the cash payout?
Both full-time and part-time employees who are Singaporeans and Permanent Residents will be
considered when determining the number of qualifying local employees.
The following groups of people are excluded when determining the number of qualifying
employees for the purpose of cash payout:
•
Self-employed (this includes a sole proprietor and partner under contract for service)
•
Shareholder who is also a Director of the company (as defined in Section 4(1) of the
Companies Act).
11. For YA 2016, my company intends to employ two more employees on part-time basis for only
three months, and contribute to the CPF for these employees, to qualify for the PIC cash
payout. The company already has one local employee (with CPF contributions). Can the
company qualify for PIC cash payout?
No, a company will not qualify for PIC cash payout if “employees” are “employed” just for
headcount purposes in claiming PIC. There must be a genuine employer-employee relationship
that was entered into for bona fide commercial reasons. An example of a bona fide employeremployee relationship would be when a company hires two additional employees to work in a
retail shop from Oct to Dec to cope with the spike in sales volume in those months.
IRAS will take enforcement action against individuals or companies engaged in false/fraudulent
PIC cash payout claims.
12. I am self-employed and have contributed to my Medisave Account. Am I considered an
employee of the business?
No. As you are self-employed, you are the owner of the business and thus cannot be considered
as an employee of the business. The eligibility of a business to claim the cash payout is based on
the number of employees who are not business owners.
13. Is the cash payout taxable?
No, the cash payout is not taxable.
14. Can I convert the qualifying expenditure under PIC into a cash payout if my business still has
taxable income?
Yes. However the qualifying expenditure available for computing enhanced allowances/
deductions will have to exclude the qualifying expenditure elected to be converted into a cash
payout.
15. Is partial conversion of the qualifying expenditure into cash payout allowed?
Partial conversion is allowed for qualifying expenditure relating to leasing of PIC IT and
Automation Equipment, in-licensing of qualifying IPRs, training, design project and research and
development.
Partial conversion is not allowed for qualifying expenditure relating to purchase of PIC IT and
Automation Equipment, registration and acquisition of IPRs.
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For the purchase of PIC IT and Automation Equipment as well as the registration and acquisition
of IPRs, you have to decide whether to claim the enhanced allowances/deductions under PIC or
to convert such expenditure into a cash payout on a “per equipment”, “per filing” or “per IPR”
basis respectively subject to a cap of $100,000* for each YA. The excess expenditure on the
same equipment/IPR exceeding the cap will be forfeited and will not qualify for tax allowances/
deductions against your income.
* Expenditure conversion cap for YA 2013 to YA 2018.
Example
Equipment A is purchased at cost of $150,000 in YA 2014
Enhanced allowances under PIC = 300% x $150,000 = $450,000
(Total Capital Allowance = Base Capital Allowance of $150,000 + Enhanced Capital Allowance
under PIC of $450,000)
You can either claim $600,000 as capital allowance against your income or opt to convert the
qualifying expenditure of $150,000 into a cash payout.
The cash payout is computed at 60% of the qualifying expenditure (i.e. 60% x $150,000 =
$90,000), subject to a cash payout cap of $60,000 for YA 2014.
You cannot make a partial conversion, i.e. you cannot apply for a cash payout on the $100,000
expenditure and claim the remaining $50,000 expenditure as capital allowance of $200,000 (400%
x $50,000). If only $100,000 expenditure is converted to a cash payout, the remaining $50,000
expenditure will be forfeited.
Conversion of qualifying expenditure into a cash payout on a “per equipment” basis does not
apply to lease payments for PIC IT and Automation Equipment.
16. Can PIC IT and Automation Equipment acquired on hire purchase (HP) qualify for cash payout?
From YA 2012 to YA 2018
Businesses can opt for cash payout on assets purchased under HP agreements signed during the
basis period for YA 2012 to YA 2018, with repayment schedule straddling two or more financial
years.
The expenditure conversion cap and cash payout rate to be applied is determined based on the
YA relating to the period in which the HP agreement is signed. For example, the cash payout
rate for a HP agreement signed during the period relating to YA 2012 is 30%. The amount of
cash payout for each YA will be computed based on the principal amount paid during the basis
period for that YA, even if the repayment schedule extends beyond the period for the last
qualifying YA (i.e. YA 2018).
To qualify for cash payout, the business must contribute CPF on the payroll of at least 3 local
employees:
• For YA 2012 – in the last month of the basis period in which the hire purchase agreement is
signed.
• For YA 2013 to YA 2015 – in the last month of the quarter or combined consecutive quarters
in which the hire purchase agreement is signed.
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• For YA 2016 to YA 2018 – for all three months in the quarter or last three months of the
combined consecutive quarters in which the hire purchase agreement is signed.
If you are claiming cash payout on PIC IT and Automation Equipment acquired under a hirepurchase agreement entered into during the basis period for YA 2013 to YA 2018, please submit
the completed Hire-Purchase Template (available on IRAS’ website) together with your PIC Cash
Payout Application Form.
For YA 2011
The cash payout option is not available for assets purchased under HP agreements (with
repayment schedule straddling two or more basis periods) signed during the basis period for YA
2011.
17. Can I claim tax deductions or allowances in my income tax return after the expenditure has
been converted into a cash payout?
No. Once you have elected to convert the qualifying expenditure into a cash payout, you cannot
claim tax deductions or allowances on the encashed expenditure. Thus you are advised to
evaluate carefully before making the election to claim the cash payout.
A2. Applying for the cash payout
18. How do I apply for the cash payout?
You can apply for the cash payout by submitting the completed PIC Cash Payout Application
Form to IRAS.
Businesses can now apply for the cash payout after the end of any financial quarter(s) in the
business’ financial year, but no later than the filing due date of the income tax return for each
YA.
19. My business’ financial year ended on 31 Mar 2014 (YA 2015). When can I apply for the cash
payout? If so, when will I receive the cash payout?
From YA 2013, businesses can apply for cash payout on a quarterly or combined consecutive
quarters basis. This means that you can apply for cash payout by submitting the PIC Cash Payout
Application Form anytime after the end of your financial quarter(s), but not later than the
income tax return filing due date of the relevant YA (15 Apr for sole-proprietorship and
partnership; 30 Nov for company).
In this case, as your financial year ends on 31 Mar 2014, the financial quarters for YA 2015 are:
Quarter
Q1
Q2
Q3
Q4
From
Apr 2013
Jul 2013
Oct 2013
Jan 2014
To
Jun 2013
Sep 2013
Dec 2013
Mar 2014
You can submit the application for cash payout after the end of each quarter, i.e.:
• Q1: Submit in Jul 2013
• Q2: Submit in Oct 2013
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• Q3: Submit in Jan 2014
• Q4: Submit in Apr 2014
You can also combine consecutive quarters for your cash payout application, for example,
combine Q1 and Q2 and submit one application in Oct 2013, after Q2 has ended.
The due date to submit the application(s) for cash payout is 15 Apr 2015 for sole-proprietorship
and partnership; and 30 Nov 2015 for company.
If your claim for cash payout is approved, you will generally receive the cash payout within three
months of receipt of the duly completed PIC Cash Payout Application Form. For instance, if you
are claiming cash payout on qualifying expenditure incurred in Q4 (financial quarter from Jan
2014 to Mar 2014) and have submitted the Cash Payout Application Form on 15 Apr 2014, the
cash payout will generally be made by IRAS by 15 Jul 2014 if your claim is approved.
20. My business’ financial year ended on 31 Mar 2014 (YA 2015). I have made a claim and
received my cash payout for qualifying expenditure (Items 1 and 2) incurred in financial
quarter, Oct 2013 to Dec 2013. I omitted to make a claim for a qualifying expenditure (Item 3)
incurred in the same quarter i.e. Oct 2013 to Dec 2013 and want to make a claim for item 3.
Can I do it and if so, how?
You can re-submit the cash payout application form for the same quarter (i.e. Oct 2013 to Dec
2013 quarter). In the form, you should only include claims for the new item (i.e. Item 3) and not
Items 1 and 2, which were previously approved. Please note that penalties may be imposed on
duplicate claims made.
Alternatively, you can include the claim for Item 3 together with your claim for a subsequent
quarter in the same financial year provided you have met the 3-local-employee condition for
that subsequent quarter.
21. I am submitting my company’s Estimated Chargeable Income (“ECI”) soon. Do I have to submit
any forms (for purposes of PIC) together with the ECI?
You do not need to submit the PIC Cash Payout Application Form together with your company’s
ECI. If you are claiming the enhanced tax deductions or allowances under PIC, the claim should
be made in the tax computation for the relevant YA.
(Note: ECI has to be submitted within 3 months from the company’s financial year-end)
22. Can I submit a facsimile copy of the Cash Payout Application Form to IRAS?
No, only the hard copy of the original form, signed by the authorised person and sent to IRAS,
will be accepted.
The authorised persons who can sign the form are sole-proprietor for soleproprietorships; precedent partner for partnerships; and company director or principal officer or
a person authorised by the company for companies.
If the form is signed by any other person, please submit a letter of authority with the form.
For sole-proprietorships
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23. When can I submit my claim for cash payout if I am a sole-proprietor with multiple soleproprietorships?
A sole-proprietor is only required to submit one PIC Cash Payout Application Form for the
multiple sole-proprietorships that have incurred qualifying expenditure. Please submit the claim
form and the relevant annexes after the financial period of all the businesses have ended.
From YA 2013, businesses can apply for cash payout on a quarterly or combined consecutive
quarters basis. The PIC Cash Payout Application Form can be submitted after the end of any
financial quarter(s) in the business’ financial year, but not later than the income tax return filing
due date of the relevant YA (15 Apr for sole-proprietorship and partnership).
24. If I have more than one sole-proprietorship, how many claim forms must I submit?
You only need to submit one claim form for all your sole-proprietorships as the cash payout is
capped at the sole-proprietor level. However separate annexes for claims relating to each
individual sole-proprietorship will need to be submitted together with the claim form.
25. I am not required to file certified statement of accounts for income tax purposes for both my
sole-proprietorship and partnership as both businesses have revenue of less than $500,000
each. Do I have to submit certified statement of accounts if I wish to apply for the cash payout?
For the purpose of claiming cash payout, you will be required to submit certified statement of
accounts by the income tax filing due date of 15 Apr. This is regardless of whether the revenue
of the business is less than $500,000.
However, from YA 2013, sole-proprietorships and partnerships opting for cash payout no longer
need to submit certified statements of accounts together with their income tax returns.
26. If a sole-proprietorship is owned by a company (not an individual) and the PIC qualifying
expenditure was incurred by the sole-proprietorship, which entity should fulfil the 3-localemployee condition in order to qualify for PIC cash payout? The company or the soleproprietorship?
The sole-proprietorship business has to fulfil the 3-local-employee condition in order to qualify
for the PIC cash payout. This is because the sole-proprietorship incurred the PIC qualifying
expenditure and as such, it would need to fulfil the 3-local-employee condition in order to
qualify for PIC cash payout. For instructions on how to complete the PIC cash payout application
form for this scenario, please refer to slide 3 of our User Guide.
A3. Receiving the cash payout
27. Will the cash payout be used to offset my tax arrears?
Yes. The cash payout will be used to offset any tax arrears (such as Individual/Corporate/GST/
Property tax) of the business before any remaining amount is paid to the business.
28. When will I receive the cash payout?
You will receive the cash payout within 3 months from the date IRAS receives the completed PIC
Cash Payout Application form and the relevant documents.
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29. How will the payment of the cash payout be made?
The cash payout is paid to the business which incurred the qualifying expenditure. You can
expect the cash payout to be credited into your existing GIRO account (according to IRAS’
records) or receive a cheque otherwise.
If you have received the payment via cheque, please deposit it into your bank account within 3
months from the date of the cheque.
30. My business uses different bank accounts for GIRO payment of income tax and GST. In which
bank account will cash payout be credited to?
The cash payout will be credited to your Income tax GIRO account.
31. What will happen in the event that the GIRO crediting is not successful (e.g. bank account is
closed)?
We will send you a cheque for the cash payout within a week of the unsuccessful GIRO payment.
32. I have misplaced the cheque for the payment of cash payout. What should I do?
Please send an e-mail to picredit@iras.gov.sg or call our helpline at 1800-356 8622 (for
companies) / (+65) 6351 3534 (for Self-employed / partnership) for assistance.
A4. Recovery of the cash payout
33. Under what circumstances do I have to repay the cash payout?
You are required to own the automation equipment and/or IPRs for which the cash payout has
been made, for at least 1 year from the date of acquisition of the automation equipment; or
acquisition of the IPR; or filing of the IPR (whichever is applicable).
Under certain circumstances, if you dispose of your automation equipment within one year, you
do not have to repay the cash payout. For more details, please refer to Question 30 of our FAQs
on Productivity and Innovation Credit (Acquisition or Leasing of PIC IT and Automation
Equipment).
If you lease/dispose of your acquired IPRs within two to five years, you will need to repay the
cash payout proportionately.
Cash payout will also be recovered if your design project submitted to DSg is not approved.
You will have to inform IRAS within 30 days from the date you lease/dispose the automation
equipment and/or IPRs. You will also be required to repay the cash payout within 30 days of
IRAS’ Productivity & Innovation Credit Cash Payout Recovery notice.
34. How do I inform IRAS if I dispose of an equipment/IPR in respect of which a cash payout was
claimed within the 1 year holding period?
You should complete the Disposal of Qualifying Assets Form and provide the details of the
equipment/IPR disposed. The completed form should be submitted to IRAS within 30 days from
the date of disposal of the equipment/IPR.
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35. How is the recovery of cash payout on disposed IPRs computed?
For acquired IPRs disposed within a year from the date of acquisition of the IPR, the full amount
of cash payout claimed will be recovered. For IPRs disposed within 2 to 5 years from the date of
acquisition of the IPR, the amount of cash payout to be recovered will be apportioned as follows:
Amount to recovered = [(5 - No. of complete years which the IPR was held) / 5] x cash payout
36. Is there a penalty for disposing a piece of equipment for which cash payout was claimed
within the holding period?
Besides the recovery of cash payout, no penalty will be imposed if you inform IRAS of the
disposal within 30 days from the date the equipment is disposed. However, penalties will be
imposed for late notification, non-compliance or fraud.
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