Turn Your Expenses Into Savings!
Productivity and Innovative Credit (PIC) for Sole-Proprietors and Partnerships
Sole-proprietors and partnerships can enjoy huge tax savings under the PIC scheme.
You get to boost your business’ performance and productivity while turning your expenses into tax savings. As announced in Budget 2013, businesses that spend a minimum of $5,000 in qualifying PIC investments in a Year of Assessment will receive a dollar-for-dollar matching cash bonus. The Bonus is capped at $15,000 over YA 2013 to YA 2015.
How does the PIC work for my business?
You have two options: The Cash Payout Option and/or the Tax Deduction Option. In addition, you can also ask for Tax Deferral for PIC!
What Activities Qualify for PIC?
The productivity improvement activities covered under PIC are:
1. Acquisition or leasing of PIC Information Technology (IT) and Automation Equipment
2. Training of Employees
3. Acquisition and In-licensing of Intellectual Property Rights
4. Registration of patents, trademarks, designs and plant varieties
5. Research and development activities
6. Design projects approved by Design Singapore Council
Cash Payout Option
– You can apply to convert up to $100,000 of your investment spending into a non-
taxable cash payout at a conversion rate of 60% for YA 2013 to YA 2015. This will benefit businesses that pay little or no taxes currently, but wish to invest in productivity and grow the business. You will receive the cash payout within 3 months after you apply for the option. The cash payout is not taxable.
– To be eligible for the 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).
– The maximum cash payout is:
– a total of $60,000 for YA 2011 and YA 2012 (30% x combined spending cap of
– a sum of $60,000 (60% X $100,000) for each YA from YA 2013 to YA 2015.
New Productivity & Innovation Credit (PIC) Bonus
Dollar-for-dollar matching cash bonus to be given to companies.
To encourage more companies to boost productivity, the Government also announced a Productivity and Innovation Credit (PIC) Bonus, a dollar-for-dollar matching cash bonus given on top of the existing 400% tax deductions or 60% cash pay-out.
The bonus is capped at S$15,000 over 3 years until 2015. It will be paid over and above the existing PIC benefits.
The PIC Bonus is part of the Government’s industry-wide effort to strengthen productivity incentives and enhance collaboration.
Businesses that invest in qualifying activities under the PIC scheme will receive an additional of PIC BONUS!
For example, You spend 100K, you will be getting 60% which will be 60K back but right now you will be getting 75K back!
You will receive an equal amount in PIC bonus on every dollar that you spend on qualifying activities, subject to a cap of $15,000 over YAs 2013 to 2015.
If you understand the budget correctly, you may get MORE THAN 100% funding support for your productivity or innovation initiatives.
They can be;
1) Developing a mobile app
2) Starting a mobile app business to assist Companies to be more productive.
3) Developing a new technology or new products
4) Attend training that can help you in your business.
1) You spend S$ 15,000 to MAXTEQ company to develop a mobile app that helps you in your business (get more customers for example).
PIC Bonus gives you S$ 15,000 &
PIC Benefits gives you S$ 9,000.
Total PIC related benefits is S$ 24,000. Not only would your expense be totally funded, you get S$ 9,000 extra.
2) You spend S$10,000 to MAXTEQ company for Autocad Software
PIC Bonus gives you S$ 10,000 &
PIC Benefits gives you S$ 6,000.
Total PIC related benefits is S$ 16,000. Not only would your expense be totally funded, you get S$ 6,000 extra.
You get paid for improving your productivity.
Contact us to find out more about what can fall under the PIC Scheme tax savings.
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