Applying for Approval of IT and Automation Equipment

IT and Automation Equipment that qualify for the Productivity and Innovation Credit (PIC) benefits are those prescribed in the PIC IT and Automation Equipment List (228KB). Businesses that invest in equipment not in the prescribed list but that automate or mechanise their business processes and enhance productivity may apply to IRAS to have their equipment approved for PIC on a case-by-case basis.

The PIC scheme will lapse after YA 2018. Businesses who wish to claim PIC benefits on qualifying expenditure must incur the expenditure by the last day of their YA 2018 basis period. The acquired equipment must be delivered by the last day of the business's financial year for the expenditure to be considered as "incurred" in the basis period of YA 2018.

Submitting Equipment for Case-by-Case Approval

Businesses do not need to seek case-by-case approval from IRAS prior to incurring the expenditure for IT and Automation equipment that is not found in the prescribed list (228KB). However, businesses must obtain case-by-case approval of the said equipment before applying for PIC cash payout or claiming PIC enhanced deductions/ allowances in their YA 2018 income tax return. The case-by-case application must be submitted to IRAS no later than two months before the filing due date for YA 2018 income tax return. The deadline for case-by-case application is:

Business Type Due Date
 Companies 30 Sep 2018
 Sole-proprietors/ Partnerships 28 Feb 2018

 

For businesses that wish to obtain case-by-case approval prior to incurring the IT and Automation equipment expenditure for greater certainty that the equipment purchased qualifies for PIC benefits, they must submit their applications by the cut-off dates (87KB) to allow sufficient time for IRAS to process these applications.

Criteria for Case-by-Case Approval

From Year of Assessment (YA) 2013, IRAS will grant approval of IT and Automation Equipment on a case-by-case basis if all the following criteria are met:

  1. The equipment automates or mechanises the business' work process(es) and
  2. The equipment enhances productivity of the business (e.g. reduced man-hours, more output or improved work processes)


    a. Rubber Trimming Machine

    Existing method: The current method in the company's rubber manufacturing process is to have an operator trim the rubber manually with a rotating grinder.

    New method: This machine replaces the operator and performs high-speed rubber trimming based on pre-configured machine settings.

    Does the machine:

    Automate/ Mechanise the Work Processes? Yes, as it now performs the work previously done by the operator. 
    Improve Productivity of the Business?Yes, as the number of units trimmed per day has increased without added manpower.

    b. Hydraulic Guillotine Shear

    Existing method: Workers used gas cutting torches and manual saw machines to cut the metal sheets. This old method resulted in uneven line cuts and rough edges which required constant refining using a manual saw.   

    New method: This machine is used to provide a straight and clean cut across large metal sheets automatically. It removes the need for manual cutting and refinements of the rough/uneven edges.

    Does the machine:

    Automate/ Mechanise the Work Processes?Yes, as it now performs the work previously done by the workers and it provides a straight and clean cut across large metal sheets automatically.
    Improve Productivity of the Business?Yes, as the number of metal sheets cut per day has increased without added manpower.

    c. Key Management System

    Existing method: The business has to hold and maintain a large number of keys for accessing server racks, safe boxes, security cabinets and lockers. This involves manual daily recording of key issuance and return in a record book.

    New method: The key management system automates the process of key issuance, return and tracking by:

    i. Releasing keys that a user is authorised to withdraw based on pre-defined access rights upon presentation of the access card;
    ii. Indicating to the user where the keys should be placed during key return, ensuring that they are returned to the correct position; and
    iii. Logging all transactions in the system of which reports can be generated for audit trails.
    iv. Eliminating the need for manual recording.

    Does the machine:

    Automate/ Mechanise the Work Processes? Yes, as it performs the work previously done by workers by automating the process of key issuance, return and tracking.
    Improve Productivity of the Business?Yes, as the time taken for key issuance, return and tracking is shortened without added manpower .

     

    d. Conveying System

    Existing method: Workers are required to physically carry the finished goods to the packaging area.

    New method: Finished goods travel directly on the conveyor system, which are transported out of the production premises for carton packaging. Workers no longer carry the goods to the packaging area. 

    Does the machine:

    Automate/ Mechanise the Work Processes?Yes, as it performs the work previously done by workers by automating/ mechanising the manual goods transportation process. 
    Improve Productivity of the Business? Yes, as the time taken to transport the goods to the packaging area is shortened without added manpower.

     

     

A newly set-up business does not have existing equipment with which to determine an increase in productivity arising from the new equipment. As such, to determine whether an equipment enhances the productivity of the new business, the equipment will be compared with the standard basic equipment used by other businesses in the same industry that are of comparable size to the newly set-up business. For example, a newly set-up wholesale business that purchases an automatic tape cutting machine  will be compared to existing wholesale business  of comparable size in the wholesale industry. If the automatic tape cutting machine is more advanced than the standard machine used in comparable existing wholesale business, the machine will be considered to have met the criterion of improving productivity.

IRAS will evaluate each application based on the criteria described above. Approval is granted on a case-by-case basis.

 

Applying for Approval of IT and Automation Equipment

STEP 1:

Before applying for approval, check if your equipment is listed in the prescribed list. If the equipment is in the prescribed list (228KB), please go ahead and make the PIC claim. If the equipment is not in the prescribed list, please assess whether the equipment meets the criteria for case-by-case approval. Vendors of the equipment should not make the application on behalf of their customers. 

STEP 2:

When seeking case-by-case approval, download and complete the Application for Approval of Equipment for PIC Form (874KB) from the IRAS website.

STEP 3:

Submit the form to IRAS by post two months before the income tax return filing due date or earlier.

Please mail your form to:
55 Newton Road
Revenue House
Singapore 307987

STEP 4:

IRAS will process the application within three weeks of receiving the application form. You will receive a notification from IRAS about the result of your application. Alternatively, businesses can log in via myTax Portal to view the case-by-case approval letter once the application has been approved.

Note:

  1. Businesses that wish to obtain case-by-case approval prior to incurring the IT and Automation equipment expenditure must submit their application early by the cut-off date (87KB).
  2. Please do not apply for the PIC cash payout or claim PIC enhanced deductions/ allowances in your Income Tax Return until case-by-case approval of IT and Automation Equipment has been granted.

If the approval of IT and Automation Equipment has been granted, please refer to:

 

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