Tax Treatment of Grants/ Payouts Commonly Received by Companies

 

The list of grants below is not intended to be exhaustive. For more information on other types of grants available, please refer to the SME Portal.

General guiding principle on the taxability of grant/ payout:

  • Grant/ payout will be taxable if it is given to supplement trading receipts or to defray operating expenses of the company (i.e. grant/ payout is revenue in nature)
  • Grant/ payout will not be taxable if it is given for the purpose of acquiring capital assets of the company (i.e. grant/ payout is capital in nature)
S/NGrant/ PayoutAdministering AgencyPurpose of Grant/ PayoutTax Treatment of Grant/ Payout

1

Productivity and Innovation Credit (PIC) Cash Payout

PIC scheme expires after YA 2018

IRAS

To encourage companies to undertake improvements in productivity and innovation

Not taxable as the payout received is an outcome arising from the conversion of tax benefits (i.e. 400% tax deductions/ allowances) into cash

2

PIC Bonus

(PIC Bonus is only applicable from YA 2013 to YA 2015)  

 IRAS

To defray companies' rising operating costs such as wages and rentals; to encourage companies to undertake improvements in productivity and innovation

Taxable as the payout is revenue in nature

3

Wage Credit

 IRAS

To help companies that may face rising wage costs in a tight labour market

Taxable as the payout is revenue in nature

4

Government Paid Leave/ Benefit including:

  • Adoption leave (AL)
  • Child Care leave (GPCL)
  • Maternity leave (GPML)
  • Maternity benefit (GPMB)
  • Paternity leave (GPPL)
  • Shared Paternal leave (SPL)

MOM and  CPF Board

To defray companies' operating costs

Taxable as the payout is revenue in nature

5

Special Employment Credit (SEC)

CPF Board

To defray companies' operating costs

Taxable as the payout is revenue in nature

6

iSPRINT

IMDA

To support SME's use of technology to boost SME's productivity and growth

Taxable as the grant is revenue in nature

7Temporary Employment Credit (TEC)  MOM Employment credit given to help employers cope with higher wage costs arising from CPF changes taking place in 2015 and 2016 ( i.e. increases in CPF contribution rates to the Medisave Account, CPF salary ceiling and employer CPF contribution rates for older workers)Taxable as the payout is revenue in nature 

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