Determining the dates that expenditure is incurred for PIC cash payout purposes

PIC Cash Payout is disbursed only when the qualifying expenditure has been incurred by the business. An expense is incurred when the legal liability to pay has arisen, regardless of the date of actual payment. The following examples provide guidance on when an expenditure is considered incurred

PIC Cash Payout is disbursed only when the qualifying expenditure has been incurred by the business. An expense is incurred when the legal liability to pay has arisen, regardless of the date of actual payment.

You may wish to note that if your PIC-qualifying expenditure is incurred before 1 Aug 2016, the 60% cash payout rate will apply notwithstanding that your PIC cash payout application may be submitted on or after 1 Aug 2016. You can submit your cash payout claim anytime after* the end of your financial quarter, but not later than the income tax filing due date of the relevant YA.

* The PIC e-Service will not accept any application that is submitted before the end of the financial quarter and you will receive an error message if you make such a submission. Please wait and submit your application after the end of the financial quarter.

Expenses incurred  Qualified Cash Payout Rate
 Before 1 Aug 2016 60%

 

Example 1

Your company's financial year ends on 31 Dec. This means your relevant basis period is 1 Jan 2016 to 31 Dec 2016 for YA 2017 corporate tax filing.

You incurred PIC-qualifying expenditure on 15 Jul 2016. You are eligible for 60% PIC cash payout rate.

You can make the cash payout claim anytime after your financial quarter ends in Sep 2016 (i.e. from 1 Oct 2016 onwards), but not later than the YA 2017 corporate tax filing due date, i.e. by 30 Nov 2017 for paper filing and 15 Dec 2017 for e-Filing.

Example 2

Your company's financial year ends on 28 Feb. This means your relevant basis period is 1 Mar 2016 to 28 Feb 2017 for YA 2018 corporate tax filing. 

You incurred PIC-qualifying expenditure on 15 Jul 2016. You are eligible for 60% PIC cash payout.

You can make the cash payout claim anytime after your financial quarter ends in Aug 2016 (i.e. from 1 Sep 2016 onwards), but not later than the YA 2018 corporate tax filing due date, i.e. by 30 Nov 2018 for paper filing and 15 Dec 2018 for e-Filing.

Illustrations on determining 60% or 40% cash payout rate on expenditure incurred:

Example 1: Equipment purchased with cash

Your company purchased a copier machine on 1 Jul 2016 and the terms in the sales invoice provide for cash-on-delivery.  

  1. Full payment was made on 1 Jul 2016 but the copier was delivered on 15 Jul 2016. The expenditure is considered as incurred on 15 Jul 2016 and you qualify for 60% cash payout rate.

    Purchase Date  Payment in Full Delivery of equipmentExpenditure considered incurred on Qualified Cash Payout Rate 
    1 Jul 2016  1 Jul 2016 15 Jul 201615 Jul 2016 60% 
  2. Full payment was made on 1 Jul 2016 but the copier will only be delivered on 15 Aug 2016. The expenditure is considered as incurred on 15 Aug 2016 and you qualify for 40% cash payout rate. 

     Purchase Date Payment in Full Delivery of equipmentExpenditure considered incurred on Qualified Cash Payout Rate 
     1 Jul 2016 1 Jul 2016 15 Aug 201615 Aug 2016 40% 

     

Example 2: Equipment purchased under Hire Purchase (HP)

Your company entered into a HP agreement with the vendor for a copier machine on 30 Jun 2016. Based on the agreement, the first instalment is scheduled on 30 Sep 2016. For equipment acquired under HP agreement, the applicable PIC conversion rate to apply would depend on when the HP agreement is signed. In this scenario, the applicable conversion rate is 60% as the company entered into the agreement prior to 1 Aug 2016. The 60% conversion rate will apply even for instalments* paid on or after 1 Aug 2016.

*The timing of the disbursement of cash payout is dependent on the actual principal sum repaid during each quarter or combined quarters. For details, please refer to Cash Payout for PIC IT and Automation Equipment under Hire-Purchase (HP) Agreement.

Example 3: Training

Your company entered into a contract on 5 Jul 2016 with a training provider. 

  1. Your company paid the full sum for a 1-day training course on 5 Jul 2016. The training will be held on 20 Jul 2016. The company qualifies for 60% cash payout rate when the employee attends the training on 20 Jul 2016. 
  2. Your company paid the full sum for a 1-day training course on 5 Jul 2016. The training will be held on 7 Dec 2016. The company qualifies for 40% cash payout rate when the employee attends the training on 7 Dec 2016. 

For more information and examples of when an expense is incurred, please refer to Examples of when an expenditure is considered incurred (158KB).

 

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