PIC+ Scheme

Businesses eligible for the PIC+ scheme are sole-proprietorships, partnerships and companies carrying on a trade or business in Singapore and whose:

• Revenue is not more than $100 million; or
• Employment size is not more than 200 employees.

These criteria are applied at the group level if the business is part of a group.

Eligible businesses are referred to as 'qualifying SMEs' henceforth.

Revenue

Revenue refers to income that arises from the ordinary activities of a business. It refers to the business' main source of income, excluding separate source income such as interest.

For the purpose of the PIC+ scheme, 'revenue' is determined based on the revenue derived during the relevant basis period for the YA. The basis period need not be a 12-month period.

Employee and Employment Size

An employee is defined as an individual who enters into a contract of service with an employer under which the employer will pay him a wage.

An employee includes the following:

• A director of a company
• A part-time employee
• An individual deployed to work for an entity under a centralised hiring arrangement

For the purpose of the PIC+ scheme, the employment size is based on the number of employees at the last day of the relevant basis period.

Determining the Type of Entity - Group, Parent, Subsidiary

A group refers to a parent and its subsidiaries as determined in accordance with Financial Reporting Standard (FRS) 110 (Consolidated Financial Statements), including entities incorporated/ registered outside Singapore. (For financial periods before 1 Jan 2014, refer to FRS 27.)

A parent refers to an entity that controls 1 or more entities.

A subsidiary refers to an entity that is controlled by another entity.

To determine whether an SME is part of a group, reference is made to the last day of the relevant basis period. Once an SME is determined to be part of a group, the revenue and employment size criteria are applied at the group level.

Self-Assessment of Eligibility

Businesses must self-assess their eligibility for the scheme as follows:

• For YA 2015, a business claiming PIC+ has to be a qualifying SME in the same period.
• For YAs 2016 to 2018, a business claiming PIC+ only needs to be a qualifying SME in any 1 of these YAs. It is able to enjoy the benefits under the PIC+ scheme from that YA onwards. This is so even if it fails to meet the qualifying conditions in subsequent YAs.

To provide certainty to businesses that want to know if they will enjoy the benefits of the PIC+ scheme at the point of making the investment, they are given the flexibility to choose the basis period with which to determine whether they are qualifying SMEs in YAs 2015 and 2016 as follows:

This flexibility means that:

1. The PIC+ scheme eligibility criteria for YA 2015 is fulfilled if your business meets the following conditions:
   1. 'Revenue' condition in YA 2014 i.e. revenue is not more than $100 million during the basis period for YA 2014; or
   2. 'Employment size' condition in YA 2014 i.e. employment size is not more than 200 employees as at the last day of the basis period for YA 2014; or
   3. 'Revenue' condition in YA 2015; or
   4. 'Employment size' condition in YA 2015.
2. The PIC+ scheme eligibility criteria for YA 2016 is fulfilled if your business meets the following conditions:
   1. 'Revenue' condition in YA 2015; or
   2. 'Employment size' condition in YA 2015; or
   3. 'Revenue' condition in YA 2016; or
   4. 'Employment size' condition in YA 2016.

From YAs 2015 to 2018, qualifying SMEs that invest in the 6 qualifying activities can enjoy 400% tax deductions/ allowances on an additional $200,000 in expenditure for each qualifying activity per YA. This brings the expenditure cap for qualifying SMEs from $400,000 to $600,000 per qualifying activity per YA.

The annual expenditure cap of $600,000 per qualifying activity may be combined as follows:

The expenditure cap for PIC cash payout remains at $100,000 of qualifying expenditure per YA.

Businesses do not need to submit a separate application for the PIC+ scheme. You must self-assess your eligibility for the scheme based on the qualifying criteria.

If you meet the qualifying criteria, you may claim enhanced deductions/ allowances in your Income Tax Return/ submit the PIC cash payout application for the relevant YA by the filing due dates:

1. My business acquired PIC IT and Automation Equipment in YAs 2013 and 2014. My business is a qualifying SME and I would like to claim PIC+ benefits on a new piece of automation equipment acquired at cost of $500,000 in YA 2015. Can you explain how the combined expenditure cap for YAs 2013 to 2015 is applied in this case?

   1. Where your business has utilised the combined expenditure cap of $1.2 million for YAs 2013 and 2014:

   YA	Cost of Equipment Acquired	Expenditure Qualifying for PIC	Expenditure Qualifying for PIC+
   2013	$800,000	$800,000	N.A.
   2014	$500,000	$400,000	N.A.
   2015	$500,000	Nil (combined expenditure cap of $1.2 million has been fully utilised in YAs 2013 and 2014)	$200,000 (combined expenditure cap of $1.4 million - $1.2 million)

   2. Where your business has not utilised the combined expenditure cap of $1.2 million for YAs 2013 and 2014:

   YA	Cost of Equipment Acquired	Expenditure Qualifying for PIC	Expenditure Qualifying for PIC+
   2013	$300,000	$300,000	N.A.
   2014	$500,000	$500,000	N.A.
   2015	$500,000	$400,000 (combined expenditure cap of $1.2 million - $300,000 - $500,000)	$100,000 (The business is eligible to claim the actual expenditure incurred or the maximum allowable amount of $200,000, whichever is lower. In this case, the business only utilised a combined expenditure cap of $1.3 million)

2. Can the additional qualifying expenditure under the PIC+ scheme be converted into PIC cash payout?

   Yes. The additional qualifying expenditure under the PIC+ scheme can be converted into cash, subject to the existing conditions for making a PIC cash payout claim.

   For example, Business A, being a qualifying SME, has fully utilised its $1.2 million expenditure cap on employee training in YAs 2013 and 2014. In YA 2015, Business A incurred another $200,000 of expenditure on employee training. Under PIC+, in YA 2015, Business A can choose to:

   • Claim enhanced deductions on the entire expenditure of $200,000; or
   • Elect for PIC cash payout on up to $100,000 of expenditure and claim enhanced deductions on the remaining expenditure of $100,000, subject to existing PIC rules.
   
   

   The business must first self-assess its eligibility for PIC+ and determine that it is a qualifying SME, before making the election for PIC cash payout. The PIC cash payout election can only be made after confirmation of your PIC+ eligibility.

   To illustrate, if your eligibility for PIC+ scheme can only be determined at the end of the 2014 financial year and you are able to confirm that the PIC+ eligibility has been met only at that point, you can only submit your PIC cash payout election after your 2014 financial year ends.

3. My business is in a tax loss position after claiming enhanced tax deductions/ allowances on the additional qualifying expenditure under the PIC+ scheme. How can my business benefit from this?

   PIC deductions/ allowances that cannot be fully utilised in any YA will form part of the unutilised trade losses/ allowances of a business, which may be set-off against other income of the business.

   The unutilised trade losses/ allowances may also be:

   • Carried forward to set-off against the business income of future YAs subject to the current tax rules;
   • Carried back to the immediate preceding YA to set-off against the prior year's income under the Loss Carry-Back Relief system; or
   • Transferred to set-off against the income of a related Singapore company under the Group Relief system or a spouse* in the case of a sole-proprietor or partner.

   * From YA 2016, the transfer between spouses is not applicable as it has been phased out.

1. If my company is part of a group, how do I work out the revenue of the group to determine if I qualify for PIC+?

   Revenue of the group is the consolidated revenue as shown in the consolidated financial statements prepared by the ultimate parent company of the group.

   If the ultimate parent company does not prepare any consolidated financial statements, the revenue of all the companies in the group has to be aggregated to arrive at the group's revenue.

2. My company is part of a group. My ultimate parent company’s consolidated financial statements are prepared under Singapore Financial Reporting Standard (SFRS) for Small Entities and not FRS 110. Can I take the revenue shown in the consolidated financial statements as the group’s revenue for the purpose of claiming PIC+ even though the concept of what constitutes a group of companies under SFRS may be different from those prescribed under FRS 110?

   IRAS accepts the concept of group companies under SFRS for Small Entities. You can determine the group revenue based on the consolidated revenue as shown in the consolidated financial statements of your ultimate parent company.

   The same group will also be applied for determining the group's employee size.

3. My company is part of a foreign group. My ultimate parent company’s consolidated financial statements are prepared under financial reporting standards that have a different definition of what constitutes a group from FRS 110. Can I take the revenue shown in the consolidated financial statements as the group’s revenue for the purpose of PIC+?

   Yes, you can determine the group revenue based on the consolidated revenue as shown in the consolidated financial statements of your ultimate parent company.

4. How are the PIC+ scheme eligibility criteria determined for sole-proprietors, partnerships and Singapore branches of foreign companies that are carrying on a trade or business in Singapore?

   Sole-Proprietor/ Partnership

   Where the owner of the sole-proprietor or controlling partner of the partnership is an individual, the PIC+ scheme eligibility criteria are applied:

   • In the case of a sole-proprietor - at the individual level by aggregating all the sole-proprietorship businesses carried on by that individual
   • In the case of a partnership - at the partnership level
   
   

   Singapore Branch

   A head office together with all its branches form a single legal entity. For a Singapore branch to qualify for the PIC+ scheme, the combined revenue of the head office and all its branches must not exceed $100 million or the combined employment size of the head office and all its branches must not exceed 200 employees. The criteria are applied at the group level if the head office is part of a group.

5. Can I still claim PIC if I do not meet the qualifying conditions for the PIC+ scheme?

   Yes, you can continue to claim for the existing tax benefits under the PIC scheme:

   • Enhanced deductions/ allowances on up to $400,000 of qualifying expenditure for each activity per YA. The annual expenditure cap of $400,000 may be combined as follows:
   
   

   For YAs 2013 to 2015 combined - $1,200,000 for each qualifying activity
   For YAs 2016 to 2018 combined - $1,200,000 for each qualifying activity

   • Convert up to $100,000 of qualifying expenditure in all 6 activities per YA into a cash payout

1. Do I need to submit supporting documents together with my claim for PIC+ benefits?

   No. You do not need to submit supporting documents in your claim for PIC+ benefits.

   However, you should retain all documents/ information supporting that you have met the eligibility conditions under the PIC+ scheme, which include:

   • Human Resources (HR) records of your employees, such as employees' employment contracts and employees' pay slips
   • CPF records, such as CPF record of payments in respect of the contributions made to your employees' CPF accounts
   
   

   If your business is part of a group, these documents must also be retained:

   • Group structure
   • Consolidated group financial accounts or separate financial accounts of each entity under the group for the relevant financial period. If the financial accounts are not audited, they are to be certified by the group's senior management (e.g. Chief Executive Officer or Chief Financial Controller)
   
   

   The supporting documents/ information in relation to your claim for PIC+ scheme are to be submitted to IRAS upon request.