What Is PIC? How Pic Benefits You?: Other Qualifying Activities

What is PIC?
The PIC scheme supports investments in

Productivity and Innovation. Businesses,
including sole-proprietors, can enjoy tax
savings in the form of Cash Payout
and/or Tax Deduction, and receive a PIC
Bonus when they invest in any of these six
productivity improvement activities:
How PIC
benets you?
On your spending for accounting
years 2010 to 2014
[Years of Assessment (YA)
2011 to 2015]
Payout Option
400%
Tax Deduction
Acquisition
or Leasing of
PIC IT and Automation
Equipment
400% tax
up to
$400,000 of your spending
each year in each of the
six activities.
means
* This
deduction of
a
tax
up to $1.6
million ($400,000 x 400%) for
each activity per YA.
addition, you can

* Incombine
your spending
Acquisition or
In-licensing of
Intellectual
Property Rights
Research and
Development
Activities
can enjoy
* You
deduction on
Training of
Employees
Registration of Patents,
Trademarks, Designs
and Plant Varieties
Cash
across YAs for each activity

to enjoy the maximum PIC
benefits as follows:
Investment in Design
Projects Approved by
the DesignSingapore
Council
YA
2011
& 2012
Combined $800,000
($400,000 x 2)
spending
cap per
activity
Maximum $3.2 million
tax
($800,000
deduction at 400%)
per activity
2013
to 2015
$1,200,000
($400,000 x 3)
$4.8 million
($1.2 million
at 400%)
You can apply to convert

up to $100,000 of your total
spending in all six activities
into a non-taxable cash
payout instead of claiming
tax deduction. This option
may be more beneficial
for businesses with low or
no taxable income.
The maximum cash payout
is:
A sum of $60,000 (60% x
$100,000) for each YA
from YA 2013 to YA 2015;
A total of $60,000 for
YA 2011 and YA 2012
combined
(30%
x
combined
spending
cap of $200,000).
To qualify for cash payout, your

business must:
have employed at least three
local employees (Singapore
Citizens or Permanent Residents
with CPF contributions, excluding
sole-proprietors and partners
under contract for service); and
carry on business operation in
Singapore.
Note: Please deduct any government grant
or subsidy given on your investment and
claim PIC benefits only on the net spending.
Other Qualifying Activities

PIC IT and Automation Equipment*
Costs of acquiring or leasing PIC IT and
automation equipment used in your
business.
PIC IT and Automation equipment refers to:
1. IT and automation equipment that are in
the PIC IT and Automation Equipment List
available at www.iras.gov.sg ; or
2. Equipment not in the PIC IT and
Automation Equipment List but which
serve to automate or mechanise
business processes and enhance
productivity may be approved for PIC
on a case-by-case basis. The
criteria
and application for approval procedure
are available at www.iras.gov.sg.
Examples of
qualifying IT and
Automation
Equipment
Computer
Software
Printers
Scanners
External Training Training of your

employees for the purposes of your
business by external service providers.
Registration
cost
of
patents,
trademarks, designs and plant varieties.
Your business must be the legal and
economic owner of the IPR.
Personal Digital
Assistant
Computer-aided
design system
software
Qualifying cost excludes legal fees,

registration fees, stamp duty and other
costs related to the acquisition.
Computer numerical
control (CNC) milling
machine
Cost incurred on IPR in-licensing from

YAs 2013 to 2015
Examples of
Qualifying
Costs that Qualify
for PIC
In-house Training Training of your

employees for the purposes of your business
by your in-house trainers and must be:
External training
course fees
a. A Workforce Skills Qualification (WSQ)

training course accredited by the
Singapore
Workforce
Development
Agency (WDA) and conducted by a WSQ
in-house training provider;
Salary and other

remuneration paid
to in-house trainers
for conducting the
training
b. A course approved by the Institute of

Technical Education (ITE) under the ITE
Approved Training Centre scheme;
Rental of training
facilities
c. On-the-job training by an on-the-job

training centre certified by ITE.
Training materials
and stationery used
for the training
d. With effect from YA2012, in-house training

not accredited/certified by WDA/ITE, is
subject to spending cap of $10,000 per
YA*
Meals and
refreshments
provided during the
training
Training costs incurred by sole-proprietor/

partner under contract for service do not
qualify for PIC benefits. They are business
owners and not employees
*Note: Spontaneous consultation, day-to-day problem-solving or meetings
and coaching/mentoring sessions between supervisors and subordinates
are not considered to be training.
Qualifying Costs
Official fees paid to
respective Registry
Professional fees for
registration of IPRs
Acquisition or In-licensing of Intellectual Property Rights *

Cost of acquiring the legal and
economic ownership of the IPR for use
in your trade. (Not applicable to
Sole-proprietorships)
Point-of-sale system
*Note: Cash conversion is on the full acquisition cost of each piece of

equipment, subject to the conversion cop.
Training of Employees
Registration of Intellectual
Property Rights* (IPR)
Examples of IPRs
that Qualify for PIC
Patents
Copyrights
Trademarks
(do not qualify for IP in-licensing)
*Note: Cash conversion is on the full acquisition/registration cost of each IPR,

subject to the conversion cap.
Research and Development (R&D)
Qualifying Costs
R&D refers to any systematic,

investigative and experimental study
that involves novelty or technical risk
carried out in the field of science or
technology with the objective of
acquiring new knowledge or using the
results of the study for the production or
improvement of materials, devices,
products, produce, or processes.
Staff costs and

consumables for R&D
activities carried out
by your business
R&D may be conducted by your

business or outsourced to an R&D
organisation.
60% of outsourced
costs or shared costs
deemed to be staff
costs and
consumables; other
percentage should be
substantiated by
supporting documents
R&D may be carried out in Singapore

or overseas. If the R&D is done
overseas, it must be related to your
trade in Singapore.
R&D cost sharing arrangement qualifies
for PIC with effect from YA 2012.
Approved Design Project
Qualifying Costs
Approved
Design
Project
is
administered
by
DesignSingapore
Council.
Staff cost of qualified

design professional
The approved design activities may be

conducted by your business or
outsourced to an approved design
service provider.
More details, including how to apply for
approval
can
be
found
on
DesignSingapore Councils website at
http://designforenterprises.sg/pic.aspx.
60% of payments to
outsourced approved
design service provider
deemed as cost of
qualified designers;
other percentage
should be
substantiated by
supporting documents.
How PIC benefits you?

PIC Bonus
Example
From YAs 2013 to 2015, PIC bonus, which is a dollar-for-dollar cash bonus,
will be provided on top of existing PIC benefits. The PIC bonus is capped at
$15,000 over all 3 YAs combined. The PIC bonus is taxable.
Example:
NEW
Business
makes
$8,000 PIC
investment
EXISTING
PIC Benefits
PIC Bonus
$8,000
Sole-Proprietorship A is in the manufacturing business. In year 2012, it

invested in a Computer Numerical Control (CNC) cutting machine and
sent staff to attend external courses. With the new automated machine,
the business is able to automate some of its manufacturing processes and
increase production capacity. The external courses help to upgrade the
staffs competency level and improve productivity.
The expenditure incurred is as follows:
$32,000 Tax
Deductions
OR
$4,800 Cash
Payout
TAX STATEMENT
TAX PAYABLE
To qualify for PIC bonus in any of the 3 YAs, your business must:
Total qualifying
PIC costs:
have spent a minimum of $5,000 on PIC-qualifying expenditure

(net of government grant/subsidy) in the basis period for that YA
(i.e. during the accounting year);
have employed at least three local employees (Singapore
Citizens or Permanent Residents with CPF contributions, excluding
sole-proprietors and partners under contract for service); and
BILL
$23,000
Sole-Proprietorship A
$20,000
+
$3,000
= $23,000
Assuming that the $19,250

Sole-Proprietors
chargeable income [CI]
for YA 2013 before
deducting equipment and
training cost is $200,000.
His tax payable* is $19,250.
Acquisition of PIC automation equipment:

$20,000 (CNC cutting machine)
Training: $5,000 (Only $3,000 incurred on training of employees.
The balance of $2,000 was for training of the Sole-Proprietor)
carry on business operation in Singapore.

You do not need to apply for the PIC bonus. IRAS will compute the
PIC bonus upon approval of your cash payout claim or upon filing of
your Income Tax Return and PIC Enhanced Allowances/Deductions
Declaration Form for Sole-proprietors and Partnerships.
How do I apply?
How to Claim/Apply
Claim tax deduction in Allowable
Business Expenses of the 4-line
statement in your Income Tax
400%
Return (Form B/Form P).
Tax
Submit PIC Enhanced Allowances
Deduction /Deduction Declaration Form for
Sole-proprietors & Partnerships
www.iras.gov.sg
Quick Links > Forms>Individuals
Cash
Payout
Submit PIC Cash Payout

Application Form
www.iras.gov.sg
Quick Links > Forms > Individuals
Receive
$15,000
PIC BONUS
The Sole-Proprietor
TAX SAVINGS
will receive a cash
$13,800
payout of $13,800
($23,000 x 60%). He
will still need to pay
tax of $19,250. Effectively,
his tax savings is $13,800.
In addition, he will receive
the maximum PIC bonus
of $15,000.
If the Sole-Proprietor
opts for cash
payout for the total
expenditure of
$23,000, the
equipment and
training costs
cannot be claimed
as a deduction
against his income.
Apply
for
Cash Payout
For more information on PIC, contact us:

Helpline for Self-employed / Partnership: (65) 6351 3534
Email: picredit@iras.gov.sg
Website: www.iras.gov.sg
When to Submit
Submit Income Tax
Return and PIC
Declaration Form by
the filing due date of
15 April
Any time after the end

of your financial
quarter(s), but not later
than the filing due date
of the Income Tax
Return (Form B/ Form P)
Receive
$15,000
PIC BONUS
He will be able to claim TAX SAVINGS

a total tax allowance of $14,180
$92,000 ($23,000 x 400%)
($19,250and his CI will be further
$5,070)
reduced to $108,000
($200,000 - $92,000). In this case,
his tax payable* will be $5,070.
Effectively, his tax savings is $
14,180 ($19,250- $5,070). In
addition, he will receive the
maximum PIC bonus of $15,000.
Alternatively, the
Sole-Proprietor
can claim tax
deduction on
the expenditure
incurred.
6 ways to boost
your tax savings
Claim
Tax
Deduction
with Productivity &

Innovation Credit (PIC)
* Tax payable is calculated based on the progressive

individual income tax rates and YA2013 tax rebate of $1,500.
The information presented above is correct as at 2 July 2013.
(For Sole-Proprietors and Partnerships)

What Is PIC? How Pic Benefits You?: Other Qualifying Activities

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What Is PIC? How Pic Benefits You?: Other Qualifying Activities

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What is PIC?

The PIC scheme supports investments in

addition, you can

across YAs for each activity

You can apply to convert

To qualify for cash payout, your

Other Qualifying Activities

External Training Training of your

Qualifying cost excludes legal fees,

Cost incurred on IPR in-licensing from

In-house Training Training of your

a. A Workforce Skills Qualification (WSQ)

Salary and other

b. A course approved by the Institute of

c. On-the-job training by an on-the-job

d. With effect from YA2012, in-house training

Training costs incurred by sole-proprietor/

Acquisition or In-licensing of Intellectual Property Rights *

*Note: Cash conversion is on the full acquisition cost of each piece of

*Note: Cash conversion is on the full acquisition/registration cost of each IPR,

Research and Development (R&D)

R&D refers to any systematic,

Staff costs and

R&D may be conducted by your

R&D may be carried out in Singapore

Approved Design Project

Staff cost of qualified

The approved design activities may be

How PIC benefits you?

Sole-Proprietorship A is in the manufacturing business. In year 2012, it

have spent a minimum of $5,000 on PIC-qualifying expenditure

Assuming that the $19,250

Acquisition of PIC automation equipment:

carry on business operation in Singapore.

Submit PIC Cash Payout

For more information on PIC, contact us:

Any time after the end

He will be able to claim TAX SAVINGS

your tax savings

with Productivity &

* Tax payable is calculated based on the progressive

The information presented above is correct as at 2 July 2013.

(For Sole-Proprietors and Partnerships)

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