Minimum Ownership Period for PIC IT and Automation Equipment and Intellectual Property Rights (IPRs)

For more information, such as where the disposal of equipment relates to one acquired on hire purchase, please refer to Annex A of the e-Tax Guide "Productivity and Innovation Credit (Fifth Edition) (831KB)".

For details on how to compute balancing adjustments, please refer to Capital Allowance.

If in the year of disposal, the cost of remaining qualifying equipment (excluding cost of the equipment disposed of) acquired in the same basis period as the equipment disposed of is more than or equal to the expenditure cap applicable for the period, waiver will be given automatically. You only need to make this declaration in your tax return. There is no need to apply or get prior approval of the waiver. 

Example

Company A acquired $1,300,000 worth of qualifying equipment during its financial year that ended on 31 Dec 2015. It claimed enhanced allowances on equipment cost of $1,200,000 (which is the combined expenditure cap for YAs 2016 to 2018) in its return for YA 2016. 

In Oct 2016 (YA 2017), it disposed of a piece of qualifying equipment with a cost of $80,000 which it acquired in year 2015 and claimed enhanced allowances of $240,000 (300% x $80,000) in YA 2016.

As the cost of the remaining qualifying equipment is $1,220,000 ($1,300,000 - $80,000) which is higher than the expenditure cap of $1,200,000, the enhanced allowances of $240,000 will not be clawed back i.e. $240,000 will not be deemed as income chargeable to tax in the year of disposal.

Where, in the year of disposal, the cost of remaining qualifying equipment acquired in the same basis period as the equipment disposed of is less than the expenditure cap applicable for the period, you will need to apply to IRAS for case-by-case waiver of the claw-back provision. For this waiver, you would need to provide the commercial reasons for such disposal for IRAS' consideration. You will be granted the waiver if IRAS accepts the commercial reasons for the disposal.   

Where Enhanced Allowance was Claimed Previously

You may apply to IRAS for case-by-case waiver by submitting the Disposal of Qualifying Assets Form (43KB) together with your Income Tax Return for the YA in which the asset was disposed of by the filing due date (15 Apr for sole-proprietorship and partnership; and 30 Nov for company). Please state clearly the commercial reasons for the disposal in the Form.

Where Cash Payout and/ or PIC Bonus have been Granted Previously

You may apply to IRAS for case-by-case waiver by submitting the Disposal of Qualifying Assets Form (43KB) to IRAS within 30 days from the date of disposal. Please state clearly the commercial reasons for the disposal in the Form.

IPR ceases when any of the following events occurs:

1. the company or partnership sells, transfers or assigns all or any part of the IPR;
2. the IPR acquired comes to an end without being subsequently revived; or
3. the company/ partnership permanently ceases to carry on the trade or business for which the IPR was acquired.

^#5 years for capital expenditure incurred on acquiring the IPR before YA2017.
^*5/ 10/ 15 years for capital expenditure incurred on acquiring the IPR from YA2017 as elected in the Declaration Form (93KB).

For more information, please refer to Annex B of the e-Tax guide "Productivity and Innovation Credit (Fifth Edition) (831KB)".

For details on writing down allowance on IPR, please refer to Writing Down Allowance for Intellectual Property Rights.

Company/ partnership permanently ceases its trade or business for which the IPR was acquired.

^#5 years for capital expenditure incurred on acquiring the IPR before YA2017
*5/ 10/ 15 years for capital expenditure incurred on acquiring the IPR from YA2017 as elected in the Declaration Form (93KB).

For more information, please refer to Annex B of the e-Tax guide "Productivity and Innovation Credit (Fifth Edition) (831KB)".

For details on writing down allowance on IPR, please refer to Writing Down Allowance for Intellectual Property Rights.

Penalties may apply if the 30-day notification period as above is not complied with.

Businesses have to repay the cash payout and/ or PIC Bonus within 30 days from the date of the PIC Cash Payout Recovery notice and/ or PIC Bonus Recovery notice, otherwise, late payment penalties may apply.