PIC+ Scheme

The PIC+ Scheme was introduced in Budget 2014 to provide support to small and medium enterprises (SMEs) who are making more substantive investments to transform their businesses. Under the PIC+ Scheme, the expenditure cap for qualifying SMEs will be increased from $400,000 to $600,000 per qualifying activity per Year of Assessment (YA).

Qualifying for PIC+ Scheme

Businesses eligible for the PIC+ Scheme are sole-proprietorships, partnerships and companies carrying on a trade or business in Singapore and whose:

  1. Revenue is not more than $100 million; or
  2. Employment size is not more than 200 employees.

This criteria will be applied at the group level if the business is part of a group.

Eligible businesses are referred to as "qualifying SMEs" henceforth.

Revenue refers to income that arises from the ordinary activities of a business. It refers to the business' main source of income, excluding separate source income such as interest.

For the purpose of PIC+ Scheme, 'revenue' is determined based on the revenue derived during the relevant basis period for the YA. The basis period need not be a 12-month period.

An employee is defined as an individual who enters into a contract of service with an employer under which the employer will pay him a wage.
An employee includes the following:

  1. A director of a company
  2. A part-time employee
  3. An individual deployed to work for an entity under a centralised hiring arrangement

For the purpose of PIC+ Scheme, the employment size will be based on the number of employees at the last day of the relevant basis period.

Example

YA

2017

Basis Period

1 Jan 2016 to 31 Dec 2016

Number of Employees in Company ABC as of 31 Dec 2016

65

Employment Size for PIC+ purposes

65

A group refers to a parent and its subsidiaries as determined in accordance with Financial Reporting Standard (FRS) 110*, including entities incorporated/registered outside Singapore.

A parent refers to an entity that controls one or more entities.

A subsidiary refers to an entity that is controlled by another entity. For more details, please refer to FRS 110 (Consolidated Financial Statements) .

To determine whether an SME is part of a group, reference is made to the last day of the relevant basis period. Once an SME is determined to be part of a group, the revenue and employment size criteria will be applied at the group level.

Example of what constitutes a group

Company A has more than 50% voting rights in Company B and Company B in turn has more than 50% voting rights in Company C. It is assumed that Company A has power over Company B and Company B has power over Company C and that such power is obtained directly and solely from the voting rights granted by equity instruments such as shares. If such power can be assessed by considering the voting rights from those shareholdings, Company A is determined to have control over Company B and Company C. Company A is the parent while Company B and Company C would be regarded as subsidiaries. The group in this example will comprise Company A, Company B and Company C. 

 *For financial periods before 1 Jan 2014, please refer to FRS 27.

Self-Assessment of Eligibility for PIC+ Scheme

Businesses will self-assess their eligibility for the scheme as follows:

  1. For YA 2015, a business claiming PIC+ has to be a qualifying SME in the same period.
  2. For YA 2016 to YA 2018, a business claiming PIC+ only needs to be a qualifying SME in any one of these YAs. It will be able to enjoy the benefits under the PIC+ Scheme from that YA onwards. This is so even if it fails to meet the qualifying conditions in subsequent YAs.

For example, Company A is assessed to be a qualifying SME in YA 2016 but does not meet the qualifying criteria in YA 2017. It can continue to enjoy the benefits under the PIC+ scheme in YA 2017 and YA 2018. In a situation where Company A could not enjoy the PIC+ benefits in YA 2016 as it did not incur qualifying expenditure in excess of the normal PIC cap (i.e. S$400,000 per qualifying activity per YA or the combined cap for the relevant YAs), it will still be eligible to enjoy the benefits under the PIC+ scheme in subsequent YAs (i.e. YAs 2017 and/ or 2018).

To provide certainty to businesses which want to know if they will enjoy the benefits of the PIC+ Scheme at the point of making the investment, they are given the flexibility to choose the basis period with which to determine whether they are qualifying SMEs in YA 2015 and YA 2016 as follows:

For Qualifying SMEs inRelevant Basis Periods for

YA 2016

YA 2015 or YA 2016

YA 2015

YA 2014 or YA 2015

Relevant YAs for PIC+ Scheme

The PIC+ Scheme is available from YA 2015 to YA 2018.

Amount of Qualifying Expenditure under PIC+ Scheme

From YA 2015 to YA 2018, qualifying SMEs that invest in the Six Qualifying Activities can enjoy 400% tax deductions/allowances on an additional $200,000 in expenditure for each qualifying activity per YA. This brings the expenditure cap for qualifying SMEs from $400,000 to $600,000 per qualifying activity per YA.

The annual expenditure cap of $600,000 per qualifying activity may be combined as follows:

Years of Assessment (YAs)Expenditure Cap per Qualifying Activity*Tax Deduction per Qualifying Activity

2016 to 2018
(Combined)

$1,800,000

$7,200,000
(400% x $1,800,000)

2013 to 2015
(Combined)

$1,400,000#

$5,600,000
(400% x $1,400,000)

* Only if you are carrying on a trade or business for the relevant YAs. Otherwise, the combined cap is reduced accordingly.

# The combined expenditure cap of $1,400,000 is only applicable for YA 2015 as the additional expenditure cap of $200,000 ($600,000 - $400,000) is not available for YA 2013 and YA 2014.

The expenditure cap for PIC cash payout will remain at $100,000 of qualifying expenditure per YA.

  1. A qualifying SME that commenced business in 2013 (i.e. basis period relating to YA 2014) will enjoy a combined expenditure cap per qualifying activity of:
    1. $1 million for YA 2014 and YA 2015 ($400,000 for YA 2014 + $600,000 for YA 2015)
    2. $1.8 million for YA 2016 to YA 2018 ($600,000 for each YA for YA 2016 to YA 2018).
  2. A qualifying SME that ceased business during the year 2016 i.e. basis period relating to YA 2017 will enjoy a combined expenditure cap per qualifying activity of:
    1. $1.4 million for YA 2013 to YA 2015 ($400,000 for YA 2013 + $400,000 for YA 2014 + $600,000 for YA 2015)
    2. $1.2 million for YA 2016 and YA 2017 ($600,000 for YA 2016 and YA 2017 each).

Applying for PIC+ Scheme

Businesses do not need to submit a separate application for the PIC+ Scheme. You will self-assess your eligibility for the scheme based on the qualifying criteria.

If you meet the qualifying criteria, you may claim enhanced deductions/ allowances in your Income Tax Return for the relevant YA by the filing due dates:

 Due Date for Paper FilingDue Date for e-Filing

Sole-proprietorships and Partnerships*

15 Apr

18 Apr

Companies

30 Nov

15 Dec

* Sole-proprietors and partnerships also need to submit the PIC Enhanced Allowances/Deduction Declaration Form (Online) for Sole-Proprietors and Partnerships together with their Income Tax Return.

For cash payout, please refer to the Cash Payout Option for more details.

FAQs

  • Group 1 - Overview

    • My business acquired PIC IT and Automation Equipment in the Years of Assessment (YAs) 2013 and 2014. My business is a qualifying SME and I would like to claim PIC+ Scheme on a new piece of automation equipment acquired at cost of $500,000 in YA 2015. Can you explain how the combined expenditure cap for YA 2013 to YA 2015 will be applied in this case?

      1.    Where your business has utilised the combined expenditure cap of $1.2 million for YA 2013 and YA 2014:

       

       

      YA 2013

      YA 2014

      YA 2015

      Combined Expenditure Cap per Activity for YA 2013 to YA 2015

       

      Cost of Equipment Acquired

      $800,000

      $500,000

      $500,000

      N.A

       

      Expenditure Qualifying for PIC

      $800,000

      $400,000

      Nil

      (combined expenditure cap of $1.2 million has been fully utilised in YA 2013 and YA 2014)

      $1.4 million

       

      Expenditure Qualifying for PIC+

      N.A.

      N.A.

      $200,000

       

       

      2.    Where your business has not utilised the combined expenditure cap of $1.2 million for YA 2013 and YA 2014

       

       

      YA 2013

      YA 2014

      YA 2015

      Combined Expenditure Cap per Activity for YA 2013 to YA 2015

       

      Cost of Equipment Acquired

      $300,000

      $500,000

      $500,000

      N.A

       

      Expenditure Qualifying for PIC

      $300,000

      $500,000

      $400,000

      (combined expenditure cap of $1.2 million - $300,000 - $500,000)

      $1.4 million (In this case, the business only utilised a combined expenditure cap of $1.3 million)

       
       
      Expenditure Qualifying for PIC+ N.A. N.A.$100,000 (business eligible to claim the actual expenditure incurred or the maximum allowable amount of $200,000, whichever is lower) 

       

    • Can the additional qualifying expenditure under the PIC+ Scheme be converted into PIC cash payout?

      Yes. The additional qualifying expenditure under the PIC+ Scheme can be converted into cash, subject to the existing conditions for making a PIC cash payout claim.

       

      For example, Business A being a qualifying SME, has fully utilised its $1.2 million expenditure cap on employee training in YA 2013 and YA 2014. In YA 2015, Business A incurred another $200,000 of expenditure on employee training. Under PIC+, in YA 2015, Business A can choose to:

      1. Claim enhanced deductions on the entire expenditure of $200,000; or
      2. Elect for PIC cash payout on up to $100,000 of expenditure and claim enhanced deductions on the remaining expenditure of $100,000, subject to existing PIC rules.

       

      However, please note that the business must self-assess its eligibility for PIC+ and determine that it is a qualifying SME, before making the election for PIC cash payout. 

       

      To illustrate, if your eligibility for PIC+ Scheme can only be determined at the end of the 2014 financial year and you are able to confirm that the PIC+ eligibility has been met only at that point, please submit your PIC cash payout election after your 2014 financial year ends.

    • My business is in a tax loss position after claiming enhanced tax deductions/ allowances on the additional qualifying expenditure under the PIC+ Scheme. How can my business benefit from this?

      Any deduction/allowance that cannot be fully utilised in any Year of Assessment (YA) will form part of the unutilised trade losses/allowances of the business. 

      The unutilised trade losses/allowances can be offset against other income of the business.  These unutilised trade losses/allowances can also be:

      1. Carried forward to offset against the business income of future YAs subject to the shareholding test and business continuity test as per current tax rules;
      2. Carried back to the immediate preceding YA to offset against the prior year income under the loss carry-back relief system;
      3. Transferred to and offset against the income of a related Singapore company under the group relief system or a spouse* in the case of sole-proprietor or partner.

       

      * From YA 2016, the transfer between spouses will not be applicable as it has been phased out.

  • Group 2 - Eligibility Criteria for PIC+ Scheme (“Qualifying SMEs” Criteria)

    • “Revenue” is defined as the business’ main source of income and is determined based on the revenue derived during the relevant basis period for a Year of Assessment (YA). It is mentioned in the IRAS’ website that the basis period for determining “revenue” need not be a 12-month period. Can you provide examples in which this applies?

      Example 1 (Newly incorporated companies)

      Company A was incorporated on 1 Aug 2016.  The financial year-end of the company is 31 Dec. Company's A first set of financial statements is prepared for the period from 1 Aug 2016 to 31 Dec 2017 i.e. a 17-month period.

      As the first set of financial statements covered a period of more than 12 months, the first two YAs and respective basis periods are as per the table below. This is because the basis period for the first YA should not be more than 12 months .

      YA

      Basis Period

      2018

      1 Jan 2017 to 31 Dec 2017

      2017

      1 Aug 2016 to 31 Dec 2016

       

       

      In this example, the company's revenue for YA 2017 would be determined based on the basis period from 1 Aug 2016 to 31 Dec 2016 i.e. a five-month period, while the revenue for YA 2018 would be determined based on the basis period from 1 Jan 2017 to 31 Dec 2017 i.e. a 12-month period.  This should be done by directly identifying the company's revenue to the corresponding basis period for each YA ("direct identification method").  Time apportionment basis may be used if the company is not able to apply the direct identification method.

      For more information on YA and basis period for new companies, please refer to Guide for New Companies.

      Example 2A (Change of financial year across two YAs)

      The financial year-end of Company B is 31 Dec. In 2016, the company changed its financial year-end from 31 Dec 2016 to 31 Mar 2017. The first set of financial statements after the change is for the period from 1 Jan 2016 to 31 Mar 2017 (i.e. a 15-month period).

      The YAs and corresponding basis periods are as follows:

      YA

      Basis Period

      2017

      1 Jan 2016 to 31 Dec 2016

      2018

      1 Jan 2017 to 31 Mar 2017

      In this example, the company's revenue for YA 2017 would be determined based on the basis period from 1 Jan 2016 to 31 Dec 2016 (i.e. a 12-month period), while the revenue for YA 2018 would be determined based on the basis period from 1 Jan 2017 to 31 Mar 2017 (i.e. a three-month period. This should be done by directly identifying the company's revenue to the corresponding basis period for each YA ("direct identification method").  Time apportionment basis may be used if the company is not able to apply the direct identification method.

      Example 2B (Change of financial year within the same YA)

      The financial year-end of Company B is 31 Mar. In 2017, the company intends to change its financial year-end from 31 Mar 2017 to 30 Sept 2017. The first set of financial accounts after the change is for the period from 1 Apr 2016 to 30 Sept 2017 i.e. 18-month period.

      The YAs and corresponding basis periods are as follows:

      YA

      Basis Period

      2018

      1 Apr 2016 to 30 Sept 2017

      2017

      1 Apr 2015 to 31 Mar 2016

       

      In this example, the company's revenue for YA 2017 would be determined based on the basis period from 1 Apr 2015 to 31 Mar 2016 i.e. a 12-month period, while the revenue for YA 2018 would be determined based the basis period from 1 Apr 2016 to 30 Sept 2017 i.e. a 18-month period. No apportionment is required although the financial account covers a period of more than 12 months.

    • If my company is part of a group, how do I work out the revenue of the group to determine if I qualify for PIC+?

      Revenue of the group is the consolidated revenue as shown in the consolidated financial statements prepared by the ultimate parent company of the group. 


      If the ultimate parent company does not prepare any consolidated financial statements, the revenue of all the companies in the group will have to be aggregated to arrive at the group's revenue.

    • My company is part of a group. My ultimate parent company’s consolidated financial statements are prepared under Singapore Financial Reporting Standard (SFRS) for small Entities and not Financial Reporting Standard (FRS). Can I take the revenue shown in the consolidated financial statements as the group’s revenue for the purpose of claiming PIC+ even though the concept of what constitutes a group of companies under SFRS may be different from those prescribed under FRS 110?

      IRAS accepts the concept of group companies under SFRS for Small Entities. You can determine the group revenue based on the consolidated revenue as shown in the consolidated financial statements of your ultimate parent company. 


      The same group will also be applied for determining the group's employee size.

    • My company is part of a foreign group. My ultimate parent company’s consolidated financial statements are prepared under financial reporting standards that have a different definition of what constitutes a group from FRS 110. Can I take the revenue shown in the consolidated financial statements as the group’s revenue for the purpose of PIC+?

      Yes, you can determine the group revenue based on the consolidated revenue as shown in the consolidated financial statements of your ultimate parent company.

    • How is the PIC+ Scheme eligibility criteria determined for sole-proprietors, partnerships and Singapore branches of foreign companies that are carrying on a trade or business in Singapore?

      Sole-Proprietor/Partnership

      Where the owner of the sole-proprietor or controlling partner of the partnership is an individual, the PIC+ Scheme eligibility criteria will be applied:

      1. In the case of a sole-proprietor - at the individual level by aggregating all the sole-proprietorship businesses carried on by that individual.
      2. In the case of a partnership - at the partnership level.

      Singapore Branch

      A head office, together with all its branches, form a single legal entity. For a Singapore branch to qualify for the PIC+ Scheme, the combined revenue of the head office and all its branches must not exceed $100 million or the combined employment size of the head office and all its branches must not exceed 200 employees. The criteria will be applied at the group level if the head office is part of a group.

    • My business would like to utilise PIC+ Scheme and claim PIC on qualifying expenditure incurred during financial years ending Dec 2014 (YA 2015) and Dec 2015 (YA 2016). What is the relevant period(s) for which the “revenue” condition or “employment size” condition must be met to be eligible for PIC+ Scheme?

      The PIC+ expenditure cap is combined for YA 2013 to YA 2015, and for YA 2016 to YA 2018. 

      For YA 2015, your business must meet the "revenue" or "employment size" condition in YA 2015. 

      For YA 2016 to YA 2018, once your business meets the "revenue" or "employment size" condition in any of the YAs, your business will be able to enjoy the tax benefits under PIC+ from that YA onwards, even if it fails to meet the eligibility criteria in subsequent YAs. To illustrate, if your business is assessed to be a qualifying SME in YA 2016 but does not meet the qualifying criteria in YA 2017, it can continue to enjoy the benefits under the PIC+ scheme in YA 2017 and YA 2018.

      Where your business could not enjoy the PIC+ benefits in YA 2016 as it did not incur qualifying expenditure in excess of the normal PIC cap (i.e. S$400,000 per qualifying activities per YA or the combined cap for the relevant YAs), it will still be able to enjoy the tax benefits under PIC+ in subsequent YAs (YAs 2017 and 2018).

      Additional Flexibility to Determine Eligibility

      To provide certainty to businesses which want to know if they will enjoy the benefits of PIC+ Scheme at the point of making the investment, they are given the flexibility to choose the basis period with which to determine whether they are qualifying SMEs in YA 2015 and YA 2016, as follows:

      To be a qualifying SME in

      Look at the basis period*

      YA 2016

      Basis period for either YA 2015 or YA 2016

      YA 2015

      Basis period for either YA 2014 or YA 2015

      * Revenue of the basis period or employment size as at the last day of the basis period for the relevant YA.

      For PIC qualifying expenditure incurred during financial year ending Dec 2014 (YA 2015)

      The PIC Scheme eligibility criteria for YA 2015 would be fulfilled if your business meets the following conditions:

      1. "Revenue " condition in YA 2014 i.e. revenue is not more than $100 million during financial year ending Dec 2013; or
      2. "Employment size" condition in YA 2014 i.e. employment size not more than 200 employees as at 31 Dec 2013; or
      3. "Revenue " condition in YA 2015 i.e. revenue is not more than $100 million during financial year ending Dec 2014; or
      4. "Employment size" condition in YA 2015 i.e. employment size not more than 200 employees as at 31 Dec 2014.

      For PIC qualifying expenditure incurred during financial year ending Dec 2015 (YA 2016)

      The PIC+ Scheme eligibility criteria for YA 2016 would be fulfilled if your business meets the following conditions:

      1. "Revenue" condition in YA 2015 i.e. revenue is not more than $100 million during financial year ending Dec 2014; or
      2. "Employment size" condition in YA 2015 i.e. employment size not more than 200 employees as at 31 Dec 2014; or
      3. "Revenue" condition in YA 2016 i.e. revenue is not more than $100 million during financial year ending Dec 2015; or
      4. "Employment size" condition in YA 2016 i.e. employment size not more than 200 employees as at 31 Dec 2015.

      To Enjoy PIC+ Scheme Benefits from YA 2016 to YA 2018

      If a business fails to meet the eligibility criteria for YA 2016

      Should a business fail to meet the eligibility criteria for YA 2016, it can refer to the basis period for each subsequent YA i.e. YA 2017 and YA 2018 to re-assess its eligibility.

      Example

      If your business incurred PIC qualifying expenditure in YA 2016 and meets the eligibility criteria for PIC+ Scheme for this YA i.e. meets the "revenue" condition or "employment size" condition in either YA 2015 or YA 2016, but fails to meet the PIC+ Scheme eligibility criteria for YA 2017 and/or YA 2018, your business can continue to enjoy the tax benefits under PIC+ Scheme for YA 2017 and YA 2018. 

      Please see table below for further illustrations.

      First YA that Business Meets PIC+ Scheme Eligibility Criteria

      Annual Expenditure Cap per Qualifying Activity

      Combined Expenditure Cap per Qualifying Activity for YA 2016 to YA 2018

       

      YA 2016

      YA 2017

      YA 2018

       

      YA 2016

      i.e. meets the "revenue" condition or "employment size" condition in either YA 2015 or YA 2016

      $600,000

      $600,000

      $600,000

      $1.8 million

       

      YA 2017

      i.e. meets the "revenue" condition or "employment size" condition in YA 2017

      $400,000

      (no PIC+ Scheme)

      $600,000

      $600,000

      $1.6 million

       

      YA 2018

      i.e. meets the "revenue" condition or "employment size" condition in YA 2018

      $400,000

      (no PIC+ Scheme)

      $400,000

      (no PIC+ Scheme)

      $600,000

      $1.4 million

       
    • Can I elect for PIC cash payout on the additional qualifying expenditure allowable under PIC+ Scheme on a quarter or combined consecutive quarter(s) basis in Year of Assessment (YA) 2016?

      Yes, you have the option of electing for PIC cash payout on a quarter or combined consecutive quarter(s) basis , as per existing rules. However, if at the point of election, you are unable to determine whether your business meets the PIC+ Scheme eligibility criteria, the PIC cash payout election can only be made after confirmation of your PIC+ eligibility.   

       

      To illustrate, if your eligibility for PIC+ Scheme can only be determined at the end of the 2015 financial year and you are able to confirm that the PIC+ eligibility has been met only at that point, please submit your PIC cash payout election after your 2015 financial year ends.

    • Can I still claim PIC if I do not meet the qualifying conditions for the PIC+ Scheme?

      Yes, you can continue to claim for the existing tax benefits under the PIC scheme:

      1. Enhanced deductions/allowances on up to $400,000 of qualifying expenditure for each activity per YA. The annual expenditure cap of $400,000 may be combined as follows:
        1. For YA 2013 to YA 2015 combined - $1,200,000 for each qualifying activity.
        2. For YA 2016 to YA 2018 combined - $1,200,000 for each qualifying activity.
      2. Convert up to $100,000 of qualifying expenditure in all six activities per YA into a cash payout.

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