PIC benefits are only available on the purchase cost or lease payments applicable to PIC IT and automation equipment. Bundled items such as cash vouchers, maintenance services and extended warranty provision are non-qualifying costs that must be excluded from your PIC claim. Any discount/rebate or subsequent cash-back obtained for the purchase or lease of the PIC IT and automation equipment must be deducted from the PIC claim as only the net amount incurred qualifies for PIC benefits.
Please see the table for examples of bundled deals and how PIC should be claimed:
Examples of bundled deals
Amount on which PIC should be claimed
|Cash discount/rebate or cash-back
||Expenditure on purchase or lease of PIC IT and automation equipment less the cash discount/rebate or cash-back.
|Additional items (e.g. cash vouchers, maintenance services, free prints that come with photocopier) bundled with the purchase price or lease payments
||Expenditure on purchase or lease of the PIC IT and automation equipment less the value of the additional items as the latter do not constitute qualifying costs.
||Expenditure on purchase or lease of the PIC IT and automation equipment less warranty fees or payment for an extended warranty period.
|Trade in of old asset where the amount ascribed to it is more than its market value
||Expenditure on purchase or lease of the PIC IT and automation equipment less the amount given for the trade-in asset.
|Fees for early termination of previous lease
||Expenditure on purchase or lease of the PIC IT and automation equipment less fees (penalty) incurred on early termination of lease bundled with the new purchase/lease.
|Lease agreement with rollover lease payments from a previous lease arrangement
||The expenditure claimable under PIC must exclude the amount of outstanding lease payments under the previous lease agreement.
As a concession, the costs of bundled items do not have to be excluded from the PIC claim if they are incidental in nature. Costs of bundled items are regarded as incidental costs if they fall within the following thresholds:
Value of bundled ≤ 10% of total value of sales/
non-qualifying items lease package and $3,000
Arrangements that seek to artificially inflate PIC claims such as purchase/lease arrangements bundled with a high cash back for trade-in of an old asset that has little market value are not acceptable. Businesses found to have over-claimed the PIC benefits through such abusive arrangements may be liable to a penalty for the over-payment of cash payout or tax undercharged.
Businesses that have engaged in abusive tax arrangements to take advantage of the PIC scheme or individuals who have assisted others with abusive tax arrangements should disclose such arrangements to IRAS immediately.
Businesses that wish to disclose errors made in their PIC claims should complete the PIC Disclosure of Error Form (40KB) and submit it to IRAS.
PIC Claims on Photocopiers
IRAS has noticed that sales/lease packages for photocopiers typically include bundled items such as free prints, cash vouchers, etc, as well as roll-overs and trade-ins. These items should be excluded from the amount that PIC is claimed on.
IRAS is currently conducting a voluntary disclosure programme for claims on purchase or lease of photocopiers on or after 1 Mar 2012. Please refer to the following documents for more information on this programme and how to disclose errors made in PIC claims to IRAS.