Productivity & Innovation Credit: 6 Ways to Boost Your Tax Savings

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The Productivity and Innovation Credit ("PIC") scheme is a scheme that supports investments in innovation and productivity. It provides tax benefits on investments made by businesses in six productivity improvement activities:
* Acquisition of leasing of PIC automation equipment;
* Training of employees;
* Acquisition of intellectual property rights;
* Registration of patents, trademarks, designs and plant varieties;
* Research and development activities; and
* Investment in approved design projects.

Under the PIC scheme, all business can enjoy tax deduction/allowances at 400% on up to $400,000 of their expenditure per year on each of the six qualifying activities mentioned above.

In addition, businesses can also exercise an option to convert their expenditure into a non-taxable cash payout.

You are encourage to find out more about how the PIC scheme can support your business as you innovate and improve your business' productivity.

Should you have any queries on PIC scheme, please contact IRAS at 1800-356-8622 or email to picredit@iras.gov.sg

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Productivity & Innovation Credit: 6 Ways to Boost Your Tax Savings

  1. 1. 6 ways to boost your tax savings with Productivity &Innovation Credit (PIC)
  2. 2. What is PIC?The PIC scheme supports investments inInnovation and Productivity. Businessescan enjoy huge tax savings in the form ofCash Payout and/or Tax Deduction whenthey invest in any of these six productivityimprovement activities: Training of Employees Acquisition or Leasing of PIC Registration of Patents, Automation Equipment Trademarks, Designs and Plant Varieties Acquisition of Intellectual Property Rights Investment in Design Research and Projects Approved by Development the DesignSingapore Activities Council
  3. 3. How PICbenefits you?On your spending foraccounting years 2010 to 2014[Years of Assessment (YA)2011 to 2015] Cash 400% Payout Option Tax Deduction * Youtocan applyof your total up $100,000 to convert * You can enjoy deduction on 400% tax up to spending in all six activities into a non-taxable cash $400,000 of your spending ing payout instead of claiming each year in each of the tax deduction. This option six activities. may be more beneficial for businesses with low or * This means deduction of a tax up to $1.6 no taxable income. million ($400,000 x 400%) for each activity per YA. At * The maximum cash payout is: the corporate tax rate of 17%, your tax savings can be up to $272,000 for each ach YA 2011 and YA 2012 activity per YA. combined (30% x combined spending * In addition, you can ing combine your spending cap of $200,000); vity across YAs for each activity to enjoy the maximum PIC $100,000) for each YA benefits as follows: from YA 2013 to YA 2015. 2011 20133 YA & 2012 to 2015 15 To qualify for cash payout, your company must:Combined $800,000 $1,200,000 00spending ($400,000 x 2) ($400,000 x 3)cap per employees (Singapore Citizensactivity or Permanent Residents with CPF contributions, excludingMaximum $3.2 million $4.8 million ion shareholders who are directorstax of the company); and ($800,000 ($1.2 milliondeduction at 400%) at 400%)per activity Singapore.Potential $544,000 $816,000tax savings@ 17%
  4. 4. ly on d m e omlaim C C Training of Employees You can claim PIC benefits on training costs to upgrade the skills of your employees.EXTERNAL TRAINING IN-HOUSE TRAINING Training of your employees by Training of your employees by external service providers your in-house trainers Qualifying Training Costs Course fees remuneration paid to in-house trainers for conducting the training In-house training must be: A Workforce Skills Qualification On-the-job training by an (WSQ) training course on-the-job training centre accredited by the Singapore certified by ITE Workforce Development Agency In-house training not (WDA) and conducted by a WSQ accredited / certified by in-house training provider WDA/ITE (with effect from YA A course approved by the 2012 and subject to spending Institute of Technical Education cap of $10,000 per YA)* (ITE) under the ITE Approved * Note: Spontaneous consultation, day-to-day Training Centre scheme problem-solving or meetings and coaching/mentoring sessions between supervisors and subordinates are excluded.
  5. 5. ly on d m m ime Co Cla PIC Automation Equipment You can claim PIC benefits on costs of acquiring or leasing any PIC automation equipment used in your business.The list of automation equipment qualifying for PIC, called the PICAutomation Equipment List, is available at www.iras.gov.sg(Businesses > For companies > Productivity and Innovation Credit).If the automation equipment is not in the PIC Automation EquipmentList, you may apply to IRAS to have the equipment approved for PICon a case-by-case basis. The criteria and application procedure areavailable on IRAS website.Examples from PIC Automation Equipment List: cutting machine system How do I apply? How to Claim/Apply When to Submit Claim tax deduction in By the filing due date of 400% Tax your Income Tax Return 30 Nov or 15 Dec (if you Deduction (Form C/Form C-S) e-File Form C-S) Submit PIC Cash Payout Any time after the end of Application Form your financial quarter(s), but Cash (www.iras.gov.sg > not later than the filing due Payout Businesses > For date of the Income Tax companies > Productivity Return (Form C/Form C-S) and Innovation Credit)
  6. 6. Case Study Applying for CASH PAYOUT Investment in accounting year 2012 Invested in a point of sale (POS) system and sent your staff for customer service courses Choose your benefits 400% Tax Deduction Cash Payout $3 $5 ,00 ,00 Company A runs 0 0 a retail outlet Cash Payout Calculation RECEIVE Total Expenses: $4,800 $8,000 CASH PAYOUT PIC Cash Payout x 60% = $4,800 Application Form Apply any time after the end of your financial quarter(s), but not later than 30 Nov 2013 Claiming TAX DEDUCTION Choose your benefits 400% Tax Deduction BILL Cash Payout $50,000 Company B is a Investment in accounting year 2012 ounting manufacturing Invested in Computer Numerical company Control (CNC) cutting machines UP TO Tax allowance = Claim tax $34,000 allowance in your $200,000 TAX SAVINGS C/C-S Income Tax ($50,000 x 400%) Return for YA 2013 YA 2013 based on corporate tax rate of 17%. by 30 Nov 2013For more information on PIC, contact us:Helpline for Companies: 1800-356 8622 | Email: picredit@iras.gov.sgWebsite: www.iras.gov.sgBusinesses > For companies > Productivity and Innovation Credit

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