Scheme

PIC Plus Scheme

The PIC Plus scheme is the name given to the enhanced PIC scheme that was modified with the latest budget release in February, which extended the period for the PIC scheme from 2015 to 2018 and raises the tax deductions/allowances cap from $400,000 provided for earlier to $600,000 for the three additional years.

According to the enhanced scheme, businesses that have qualifying expenditure for any category of the given six can combine their caps between the YAs 2013-2015 and then again from 2016 to 2018. Therefore, the combined cap will be $1,400,000 and $1,800,000 respectively (the extra $200,000 applies only from 2015 on wards).

Sole proprietorships, partnerships and companies may qualify for the PIC scheme only if:

  • Their annual turnover does not exceed $100 million
  • They do not employ more than 200 workers
  • Must have an active trade operation within Singapore

Businesses that wish to claim PIC as a group will be assessed using similar criteria for each enterprise in the group, and all must fulfill them. In addition, the businesses must have at least three local employees, excluding partners, directors and owners, for whom they contribute CPF in order to qualify. Application for the PIC scheme follows the same method as the initial scheme.

Cash payout option

The cash payout option is ideal for small newly set-up businesses that face cash flow constraints. This option allows a business that has eligible expenses in qualifying categories to convert 60% of it into a tax-free cash payout made out to the business, up to a maximum non-combinable amount of $100,000. The initial payout for the first two years was 30% with a combinable cap of $200,000, but the percentage was doubled to 60% from 2013 on.

Year of Assessment (YA) Expenditure Cap for ALL Qualifying Activity Cash Payout Rate Cash payout sum
2011 and 2012
(Combined)
$200,000 30% $60,000(30% x $200,000)
2013 to 2015
(Cap cannot be combined)
$100,000 per YA 60% $60,000 per YA(60% x $100,000)
2016 to 2018
(Cap cannot be combined)
$100,000 per YA 60% $60,000 per YA(60% x $100,000)

To qualify, a business must fulfill the same criteria as for the tax allowance option mentioned above.

PIC Bonus

The bonus comes as an additional benefit of the PIC scheme, allowing qualified and approved businesses to receive a taxable cash bonus of up to $5,000 per YA on a dollar-for-dollar basis with qualifying expenditure. The bonus period runs from 2013 to 2015, making the total maximum amount that a business may receive $15,000 for the entire period.

You need not apply for the PIC bonus, the IRAS automatically assesses expenditure and application and will notify you if and how much shall be paid out to you in bonus. In order to qualify for consideration, you must have enough surplus expenditure left over after other subsidies and grants from the government bodies have been subtracted.

Tax deferral

The tax deferral option sort of allows qualified businesses to enjoy next year’s PIC benefits this year. Here, a successful business will opt to defer each dollar of tax due to this year of assessment with each dollar of PIC-qualified expenditure on the same year (which, according to rules, would have been claimed in the next YA) up to a cap of $100,000. The sum deferred falls due for paying at the time the nest YA’s first assessment is raised.