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About PIC Bonus
Objective of PIC Bonus
Qualifying Conditions
Computing PIC Bonus
Payment of PIC Bonus
Taxability of PIC Bonus
Frequently Asked Questions (FAQs)

For Years of Assessment (YAs) 2013 to 2015, businesses that invest in qualifying activities under the Productivity and Innovation Credit (PIC) scheme will receive a PIC Bonus.

About PIC Bonus

The PIC Bonus gives businesses a dollar-for-dollar matching cash bonus for YAs 2013 to 2015, subject to an overall cap of $15,000 for all 3 YAs combined.

This is given on top of the existing 400% tax deductions/allowances and/or 60% cash payout ("PIC cash payout") under the PIC scheme. To enjoy the PIC Bonus, businesses must have made a claim for the 400% tax deductions/allowances and/or the PIC cash payout.

The PIC Bonus is taxable.

Objective of PIC Bonus

The PIC Bonus helps businesses defray rising operating costs such as wages and rentals and encourages businesses to undertake improvements in productivity and innovation. The PIC bonus is determined by the amount of expenditure businesses incur on PIC-qualifying activities.

Qualifying Conditions

Businesses eligible for the PIC Bonus are sole-proprietorships, partnerships and companies that have:

  • incurred at least $5,000 in PIC-qualifying expenditure* during the basis period for the YA in which a PIC Bonus is claimed;
  • active business operations in Singapore; and
  • at least 3 local employees (Singapore citizens or Singapore permanent residents with CPF contributions) excluding sole-proprietors, partners under contract for service and shareholders who are directors of the company. A business is considered to have met the 3-local-employee condition if it contributes CPF on the payroll of at least 3 local employees:

    • Where 400% tax deductions/allowances on qualifying PIC expenditure is claimed - in the last month of the basis period for the YA to which the deductions/allowances relates.

    • Where PIC cash payout on qualifying PIC expenditure is claimed - in the last month of the quarter or combined consecutive quarters to which the cash payout option relates.


      New! From YA 2014, for the purpose of fulfilling the 3-local-employee condition, individuals deployed under a centralised hiring arrangement# will be regarded as employees of the business where these individuals are deployed, subject to the following qualifying conditions:

      •  The claimant is able to produce supporting documents on the recharging of employment costs by a related entity, in respect of employees working solely in the claimant entity;

      • The corporate structure and centralised hiring practices are adopted for bona fide commercial reasons; and

      • The employee whose cost has been recharged will not contribute to the requisite headcount of the related party (which bore the upfront manpower costs).

        # Some examples of centralised hiring arrangements include deployments where the HR function of a group of companies is centralised in a single entity, with the staff costs (including training expenditure) allocated to the respective entities, or a secondment, where employees are seconded to work for a related company. Once seconded, the staff costs are fully recharged to the related company.     

      * This refers to the amount net of grant or subsidy by the Government or any statutory board.

Computing PIC Bonus

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.

Example

  YA 2013 YA 2014 YA 2015

Qualifying PIC Expenditure

$6,000

$3,000

$12,000

PIC Cash Payout (1)

$3,600
($6,000 x 60%)

$1,800
($3,000 x 60%)

$7,200
($12,000 x 60%)

PIC Bonus

$6,000

$0 (2)

$9,000 (3)

Total PIC Benefits

$9,600

$1,800

$16,200

(1) Computed based on 60% of qualifying PIC qualifying expenditure. In this example, the business applies for cash payout for YAs 2013 to 2015. Businesses that claim 400% tax deductions/allowances in any or all the three YAs will also be eligible for the PIC Bonus.
(2) PIC Bonus is not given as qualifying PIC expenditure incurred during YA 2014 is less than $5,000.
(3) PIC Bonus cap of $15,000 less PIC Bonus given in YA 2013 of $6,000.

Payment of PIC Bonus

Businesses do not need to apply for the PIC Bonus.

Where 400% tax deductions/allowances is claimed in the income tax return

IRAS will compute the amount of PIC Bonus for each YA upon filing of the income tax return*.

Most businesses can expect to receive the PIC Bonus within three months from filing their tax return and as long as all requisite information has been submitted with the tax return.

* Sole-proprietors and partnerships also have to submit the PIC Enhanced Allowances/Deduction Declaration Form for Sole-Proprietors and Partnerships (99KB) together with their income tax return.

Where PIC cash payout is claimed via the PIC Cash Payout Application Form

IRAS will compute the amount of PIC Bonus upon approval of the PIC cash payout claim* submitted via the PIC Cash Payout Application Form. IRAS will generally approve the cash payout claim within three months from the date of receipt of the application, provided all requisite information is submitted at the time of application. The PIC Bonus will be paid within three weeks after the cash payout claim has been approved.

* Businesses can apply for PIC cash payout up to four times a year (i.e. after the end of each quarter or combined consecutive quarters).   

How you will receive the PIC Bonus

Businesses with income tax GIRO accounts will have the PIC Bonus credited into their accounts. Businesses without income tax GIRO accounts will receive cheques from IRAS. Please deposit the cheques within three months from the date printed on the cheque.

The PIC Bonus will be used to offset any tax arrears (such as Income Tax, Property Tax, GST) of the business before any remaining amount is paid. IRAS will notify the business of the offset accordingly.  

Taxability of PIC Bonus

The PIC Bonus is taxable. It will be taxed in the YA relating to the year of receipt, i.e. when IRAS confirms your business' eligibility of the PIC Bonus and disburses the Bonus to you. 

For example, PIC Bonus received in the financial year ending in 2013 will be taxed in YA 2014.

Sole-proprietorships and partnership are not required to declare the PIC Bonus amount received in their income tax return (Form B/ Form P) as this will be automatically included by IRAS in their tax assessment for the relevant YA. Companies are however, still required to declare the PIC Bonus amount received in their income tax return (Form C/ Form C-S) for the relevant YA.

Frequently Asked Questions (FAQs)

For more details, please refer to the FAQs on PIC Bonus (141KB).

 

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Last Updated on 3 December 2014


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