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Productivity And Innovation Credit (PIC)

 

.. Get significant tax deductions or payouts for your investments in research & development, innovation, automation and training.

 

For who?

All Singapore-registered businesses are eligible for PIC.

For what?

For businesses to invest in a broad range of activities along the innovation value chain to improve innovation and productivity from Years of Assessment (YAs) 2011 2018.

PIC covers spending on 6 business activities in the following areas:

  Research & development (R&D) - including R&D projects conducted outside Singapore

  Registration of intellectual property rights patents, trademarks, designs and plant varieties

  Acquisition of intellectual property rights (E.g. when a company buys a patent or copyright for use in its business)

  Acquisition or leasing of prescribed automation equipment

  Training of employees

  Approved design projects

For more details on each of the 6 activities, please refer to the Summary of Deductions/Allowances on Qualifying Activities table on the Inland Revenue Authority of Singapore's (IRAS') website.

The basis period refers to your accounting period ending in the year before the YA, e.g:

  If your accounting period ends on 30 September, the basis period for YA 2011 will be 1 October 2009 30 September 2010.

Cash Payout Option

Small and growing businesses with cash constraints have the option to convert their qualifying PIC expenditure into a cash payout to invest in technology or upgrade their operations

  This cash conversion option will be from YAs 2011- 2015 and YAs 2016 2018.

To be eligible for the cash payout option, businesses must have:

  incurred the necessary qualifying expenditure during the basis periods for YAs 2011 - 2015

  at least 3 local employees (Singapore Citizens or Permanent Residents with Central Provident Fund contributions)

  active business operations in Singapore

From YA2014 onwards, the condition of 3-local employees must meet the following:

  the claimant is able to produce supporting documents about the companys corporate structure.

  the companys corporate structure and centralised hiring practices are adopted for bona fide commercial reasons.

  employees who have been recharged of employment cost will not contribute to the requisite headcount.

*Examples of centralised hiring arrangements include deployments and secondments to a related company. Once seconded, the staff costs are fully recharged to the related company.

 

How much?

Up to 400% tax deductions/ allowances and/or 60% cash payout.

All Business Claiming PIC

Businesses can deduct 400% of their qualifying expenditure on each of the 6 qualifying activities from their income, subject to:

 

Year of Assessment (YA)

Expenditure Cap per Qualifying Activity

Tax Deduction per Qualifying Activity

2011 and 2012
(Combined)

S$800,000

S$3,200,000
(400% x S$800,000)

2013 to 2015
(Combined)

S$1,200,000

S$4,800,000
(400% x S$1,200,000)

2016 to 2018
(Combined)

S$1,200,000

S$4,800,000
(400% x S$1,200,000)

See:Illustration examples in IRAS website

Small & Growing Businesses Converting Their Qualifying Expenditure To A Cash Payout

These businesses will have the option to convert S$400 to S$100,000 of their qualifying expenditure for all 6 activities taken together into a cash payout.

 

Year of Assessment (YA)

Expenditure Cap for ALL Qualifying Activities

Cash Payout

2011 2012
(Combined)

S$200,000

S$60,000
(30% x S$200,000)

2013 2015
(Combined)

S$100,000 per YA

S$60,000 per YA
(60% x S$100,000)

2016 2018
(Cap cannot be combined)

S$100,000 per YA

S$60,000 per YA
(60% x S$100,000)

See: FAQs on Cash Payout Option

PIC Tax Deferral Option

The Tax Deferral option has been put in place to help businesses with their cash flow and investments in productivity.

The Tax Deferral option is available for businesses who choose to defer tax payable for YA 2011 to 2014.

The amount of tax businesses can defer is capped at S$100,000 and is computed based on the lower of:

  The tax payable assessed for the current YA; and

  The qualifying PIC expenditure incurred in the current accounting year.

 

Things to note

The Tax Deferral option will be phased out after 2014.

Refer to the PIC IT and Automation Equipment List for the prescribed list of IT and automation equipment qualifying for PIC.

Prior approval from DesignSingapore Council is required for claims on design projects.

Offenders convicted of PIC fraud will have to pay a penalty of up to 4 times the amount of cash payout fraudulently obtained, and a fine of up to S$50,000 and/or imprisonment of up to 5 years.

 

For more info

Productivity and Innovation Credit (PIC) by Inland Revenue Authority of Singapore (IRAS)

How to apply?

You may contact us at Tel: 6220 3306 to find out more.

 

 

 

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