The PIC scheme has expired after the Year of Assessment (YA) 2018. Businesses are not allowed to claim PIC benefits on expenditure incurred after the basis period of YA 2018.

Overview of PIC IT & Automation Equipment

PIC benefits may be claimed when a business acquires or leases PIC IT and automation equipment.

PIC IT and automation equipment refers to:

Not sure if your equipment qualifies for PIC benefits? Use this equipment search function (XLSX, 3.53MB). Simply open the file, key in your equipment in the box and hit 'Enter' to find out if your equipment qualifies for PIC.

The following qualify for PIC:

  • Second-hand IT and automation equipment
  • Installation costs incurred as part of the costs of acquiring the equipment (e.g. site preparation, delivery and assembly costs)
  • Equipment purchased for overseas use. If the PIC IT and automation equipment is placed with an overseas subcontractor in an outsourcing arrangement for the purpose of providing manufacturing services to the company, the cost incurred by the company to purchase the equipment qualifies for PIC if:
    • The equipment is used exclusively for the manufacture of the company's products; and
    • The company maintains control over the equipment used by the subcontractor (including maintenance of the equipment).

Learn more about the tax treatment of assets purchased for use by subcontractors and other parties.

  • Equipment leased for your business. If you lease PIC IT and automation equipment for use in your business, the lease payment incurred qualifies for PIC, provided that the equipment is not onward leased to another party during the same basis period. Expenditure on both the purchase and lease of PIC IT and automation equipment is capped under 1 activity.

Examples of Qualifying Expenditure & Non-Qualifying Expenditure

Qualifying Expenditure Non-Qualifying Expenditure
  • Website development costs (including costs incurred for one-time registration of domain name for the website) from YA 2014
  • Cost or lease expenses of IT equipment such as fax machine, laser printer, computer, laptop and software (For lease payment of software, the lessee must be the end user with the right to use the software and not the right to reverse engineer, decompile, or disassemble the software, or exploit the copyright to the software.)
  • Cloud computing payments
    • Infrastructure as a Service (IaaS) - Qualifying costs include computing cost and storage cost
    • Platform as a Service (PaaS) - Qualifying costs include licensing fees, set-up fees, consultancy fees for SaaS enablement of service provider applications
    • Software as a Service (SaaS) - Qualifying costs include licensing fees, consultancy/ set-up fees
  • Accounting software including those listed in IRAS' Accounting Software Register; the Register lists the accounting software that meets IRAS' technical requirements

Cost or lease expenses of the following equipment (non-exhaustive) that are not in the PIC IT and Automation Equipment List:

  • Air-conditioner
  • Freezer/ chiller/ refrigerator
  • Furniture and fittings
  • Motorcycle
  • Motor vehicle
  • Refrigerated display
  • Renovation and refurbishment cost (e.g. cost paid to install office workstation)
  • Uninterrupted power supply (UPS)

Examples of IT & Automation Equipment Qualifying for PIC (By Industry)

View examples of IT and automation equipment that qualify for PIC benefits listed by industry (PDF, 104KB). This list contains examples of equipment approved for PIC on a case-by-case basis and is not exhaustive.

IRAS evaluates each application based on certain qualifying criteria. Applications for items on this list must still be submitted to IRAS for case-by-case approval, as we need to evaluate if the qualifying criteria are met in each company's circumstances. The outcome of our evaluation may differ entity to entity, depending on the existing level of automation or mechanisation in the business.

FAQs

Others (Website, Software, Cloud Computing)

  1. Can website development costs and web hosting fees qualify for PIC?

    Website Development Costs from YAs 2014 to 2018
    PIC benefits may be claimed on development costs incurred on the provision of a new website, including costs incurred for the one-time registration of a domain name for the website. You cannot claim PIC benefits (both cash payout and enhanced allowances) if the website is under development. The claim can only be made when the website is functional i.e. accessible over internet.

    Subsequent changes or enhancements (e.g. routine updating, re-writing of contents, maintenance and support) are considered as a revamp of an existing website and do not qualify for PIC as they do not involve a provision of a new website. However, if there are costs incurred on the addition of e-commerce functions to the website or any enhancement to make the website mobile responsive, these costs are eligible for PIC as these enhancements are regarded as software development (category 4 of the PIC IT and Automation Equipment Prescribed List).

    Website Development Costs from YAs 2011 to 2013
    Website development costs do not qualify for PIC benefits. However, if you are able to give a breakdown of the website development costs, PIC benefits may be granted on costs incurred for software application and hardware such as servers, which are included in the PIC list.

    Web Hosting Fees
    Fees paid for web hosting services do not qualify for PIC benefits. However, if you are able to provide a breakdown of the web hosting fees, PIC benefits may be granted on costs incurred for the acquisition/ leasing of PIC IT and automation equipment such as software and servers.

  2. What are some examples of qualifying and non-qualifying website development costs?

    Examples of qualifying website development costs include:

    • One-time registration of domain name
    • Cost of developing or purchasing the website, including design fees
    • Software application development costs
    • Hardware and server costs

    Examples of non-qualifying costs include:

    • Renewal or purchase of domain name
    • Web hosting services
    • Online advertising/ marketing services (e.g. providing Search Engine Optimisation (SEO) services, Search Engine Marketing (SEM) services)
    • Routine updates
    • Maintenance and support services
  3. Does expenditure incurred on upgrading of software qualify for PIC?

    Yes, expenditure incurred on software upgrades qualifies for PIC.

  4. Does expenditure incurred on leasing of office system software qualify for PIC?

    Yes, expenditure incurred on leasing of office system software qualifies for PIC.

  5. Does purchase of software (e.g. shrink-wrap software) qualify for PIC?

    Yes, the cost of purchase qualifies for PIC.

  6. Do fees paid for maintenance of software qualify for PIC?

    No. Payments for maintenance of software (e.g. debugging, helpdesk support) do not qualify for PIC. You can continue to claim deduction of such maintenance fees under the current tax rules.

  7. Can my business claim PIC benefits on the development of software in Singapore?

    If the software is developed for business use, PIC benefits can be claimed on the development costs.

    Qualifying development costs include fees paid to external software developers.

  8. Must my software development be completed before I can make PIC claims?

    For PIC cash payout claims:
    You cannot claim PIC cash payout if the software is under development. The claim can only be made when the software is fully developed. However, if the development is by modules and the completed module can function independently, you can claim PIC cash payout after each module is completed.

    From YA 2016, to qualify for cash payout on PIC IT and automation equipment, businesses need to show that the equipment is in use by the business at the point when they elect for cash payout. This condition reinforces the objective of encouraging businesses to increase their productivity by using automation equipment in their businesses. For businesses with genuine cashflow difficulties and that are not able to secure the delivery of the equipment before payment is made, IRAS may waive the requirement for the equipment to be 'in use' on a case-by-case basis.

    For enhanced allowance claims:
    To claim enhanced allowances over 1 year under Section 19A(2), the software must be fully developed and installed before the enhanced allowances can be claimed. However, if the development is by modules and the completed module can function independently, you can claim enhanced allowances after the module is completed.

    To claim enhanced allowances over 3 years under Section 19A(1), the software does not need to be fully developed and installed before the enhanced allowances can be claimed. The cost incurred in the related YA qualifies for enhanced allowances to be claimed over 3 years.

  9. I am a cloud computing vendor. Does my expenditure incurred on PIC IT and automation equipment used in the provision of cloud computing services to my customers qualify for PIC?

    Expenditure incurred to acquire/ lease hardware
    The expenditure you incurred to acquire/ lease PIC IT and automation equipment (hardware) qualifies for PIC.

    Expenditure incurred to acquire/ lease software
    Your expenditure to acquire/ lease software that is onward leased to your customers does not qualify for PIC. Only the cloud computing customers, who are the end users of the software, can claim PIC benefits on such expenditure. However, if you acquire/ lease software for your own business use, you can claim PIC benefits on the software.

Equipment Qualifying for Investment Allowances

  1. Can I claim PIC for equipment that qualifies for investment allowances?

    Yes, but you cannot claim both investment allowances and enhanced allowances on the same dollar of the asset cost incurred. Investment allowances can be claimed on the portion of the asset cost that does not qualify for enhanced allowances (e.g. remaining cost of the equipment exceeding the expenditure cap).

Claiming PIC Benefits

Claiming Enhanced Capital Allowances (CA)

Enhanced CA is generally granted on the full cost of the equipment. Any claim for enhanced CA (300%) must be made together with the base CA (100%) for automation equipment purchased in the basis period relating to the YA of concern.

If the total costs incurred exceed the expenditure cap, you can claim enhanced CA only on the partial cost of 1 piece of equipment.

The table below shows the period over which the base and enhanced CA can be written down:

Cost per item Items 1 to 29 of List (i.e. also prescribed automation equipment) Items 30 to 40 of List (i.e. not prescribed automation equipment) Approved for PIC on case-by-case basis (i.e. not in List)
Cost $5,000* or less per item

Write down over:

  • 1 year;
  • 3 years; or
  • Tax working life

Write down over:

  • 1 year;
  • 3 years; or
  • Tax working life

Write down over:

  • 1 year;
  • 3 years; or
  • Tax working life
Cost more than $5,000 per item

Write down over:

  • 1 year;
  • 3 years; or
  • Tax working life

Write-down over:

  • 3 years; or
  • Tax working life

Write-down over:

  • 3 years; or
  • Tax working life

* Low-value assets can be written off in 1 year subject to a maximum cap of $30,000 per YA. For PIC qualifying equipment costing $5,000 or less, both the base and enhanced allowances are used to determine whether the cap of $30,000 has been reached.

Learn how to claim CA.

You may also refer to Section 3 (Page 18) of the e-Tax Guide on Productivity and Innovation Credit (Fifth Edition) (PDF, 1016KB).

Important

Expenditure on equipment under a sale and lease-back arrangement does not qualify for enhanced CA if CA had previously been allowed for that equipment prior to the sale and lease-back arrangement.

Claiming PIC Cash Payout

From YA 2016, you may qualify for cash payout on PIC IT and automation equipment if the equipment is used by your business at the point of electing for cash payout. This condition reinforces the objective of encouraging businesses to increase their productivity by using automation equipment in their businesses.

For businesses with genuine cashflow difficulties and that are not able to secure the delivery of the equipment before payment is made, IRAS may waive the requirement for the equipment to be 'in use' on a case-by-case basis.

If you opt to convert the qualifying expenditure into a cash payout, the conversion must be done on a 'per equipment basis' on the full cost of the automation equipment, subject to the relevant expenditure cap. Partial conversion is not allowed.

If the qualifying expenditure of the equipment is greater than the amount qualifying for a cash payout conversion, the excess expenditure incurred is forfeited and is not available for capital allowance claims against business income.

Cash Payout for PIC IT and Automation Equipment under a Hire-Purchase (HP) Agreement

Businesses can opt for cash payout on PIC IT and automation equipment purchased under HP agreements signed during the basis periods for YAs 2012 to 2018, where the repayment schedule straddles 2 or more financial years. The cash payout option is not available for assets purchased under HP agreements (with repayment schedule straddling 2 or more basis periods) signed during the basis period for YA 2011.

For PIC IT and automation equipment acquired on hire purchase, the cash payout conversion rate to be applied is based on the date on which the HP agreement is signed. For example, the cash payout conversion rate for an equipment acquired via a HP agreement signed on 1 Jul 2016 is 60%. If the HP agreement is signed on or after 1 Aug 2016, the cash payout conversion rate is 40%. Businesses can continue to claim for principal repayments that straddle beyond YA 2018 if the HP agreement is signed in the basis periods for YAs 2012 to 2018. If the HP agreement is signed in the basis period for YA 2019 or after, the expenditure incurred does not qualify for cash payout.

The amount of cash payout for each YA is computed based on the principal amount paid during the basis period for that YA, even if the repayment schedule extends beyond the period for the last qualifying YA (i.e. YA 2018).

Example

Company A is a Dec year-end company. During the quarter Jul to Sep 2016, Company A invests in several items of qualifying equipment for its factory and elects for cash payout on all the equipment.

The applicable cash payout rate and the amount of PIC cash payout for each equipment is as follows:

Equipment Purchase
Date
HP Agreement Signed Date Cost ($) Cash Payout Rate Cash Payout ($)
W (cash acquisition) 1 Jul 2016 - 20,000 60% 12,000
X (under HP) - 1 Jul 2016 30,000 60% 18,000 *
Y (cash acquisition) 1 Aug 2016 - 10,000 40% 4,000
Z (under HP) - 1 Aug 2016 20,000 40% 8,000 *

* The amount of cash payout disbursed depends on the actual principal sum repaid during each quarter or combined consecutive quarters. The cash payout on principal sums committed will be paid, even beyond YA 2018.

The table below illustrates the amount of PIC cash payout that Company A will receive in respect of its equipment acquired under HP terms, assuming that the principal repayments are made over 3 years on a straight-line basis.

Equipment under HP HP Agreement Signed Date Cost($) Cash Payout Rate YA 2017 YA 2018 YA 2019
X 1 Jul 2016 30,000 60% Principal Repayment
$10,000

PIC Cash Payout

$10,000 x 60% = $6,000
Principal Repayment
$10,000

PIC Cash Payout

$10,000 x 60% = $6,000
Principal Repayment
$10,000

PIC Cash Payout

$10,000 x 60% = $6,000
Z 1 Aug 2016 20,000 40% Principal Repayment
$6,667

PIC Cash Payout

$6,667 x 40% = $2,666.80
Principal Repayment
$6,667

PIC Cash Payout

$6,667 x 40% = $2,666.80
Principal Repayment
$6,666

PIC Cash Payout

$6,666 x 40% = $2,666.40

Businesses claiming cash payout on PIC IT and automation equipment acquired under a HP agreement entered into during the basis periods for YAs 2013 to 2018 must submit the completed Hire Purchase Template (XLSX, 308KB) together with their PIC cash payout application.

Treatment of Bundled Items

When IT and automation equipment is purchased, additional items may be bundled with it. Such bundled items could include a cash discount/ rebate, cash vouchers, maintenance services or warranty fees. An example is a business that purchases an offset printing press and also receives free prints or the trade-in of the old machine as bundled items.

PIC benefits are only available on the purchase cost or lease payments applicable to PIC IT and automation equipment. Bundled or additional items must be deducted from your PIC claim as only the net amount incurred qualifies for PIC benefits.

Examples of Bundled Deals and How PIC Should Be Claimed

Examples of Bundled Deals What You Can Claim for PIC
Cash discount/ rebate or cash-back What you spent to purchase or lease the PIC IT and automation equipment minus the cash discount/ rebate or cash-back
Additional items (e.g. cash vouchers, maintenance services, free prints that come with photocopier) bundled with the purchase price or lease payments What you spent to purchase or lease the PIC IT and automation equipment minus the value of the additional items. Additional items are not qualifying costs
Warranty fees What you spent to purchase or lease the PIC IT and automation equipment minus warranty fees or payment for an extended warranty period
Old assets traded in for a market value higher than what it is worth What you spent to purchase or lease the PIC IT and automation equipment minus the amount given for the trade-in asset in excess of its market value
Fees (penalty) incurred by customer for early termination of previous lease, where the new purchase/ lease price includes the early termination fee What you spent to purchase or lease the PIC IT and automation equipment minus any fees (penalty) incurred on the early termination of the lease
Lease agreement with rollover lease payments from a previous lease arrangement The expenditure claimable under PIC must exclude the amount of outstanding lease payments under the previous lease agreement

As a concession, IRAS will accept the bundled items as part of the qualifying expenditure only when the bundled items are incidental costs.

Bundled items are regarded as incidental when the value of the bundled non-qualifying items is:

  1. Less than or equal to 10% of total value of sales/ lease package; and
  2. Less than or equal to $3,000

FAQs

  1. For automated equipment bought on hire purchase, how do I compute the enhanced allowances under PIC?

    The enhanced allowances are computed up-front based on the full cost of equipment. The full cost of the equipment (instead of repayments made during the basis period) is used for the purpose of computing the expenditure cap for the relevant YA. Thereafter, the enhanced allowances are allowed proportionately to the business based on the actual principal repayments made during the year. This does not include interest cost incurred for the hire purchase.

    For a computation of the enhanced allowances on equipment acquired on hire purchase, refer to Annex A-1 of the Productivity & Innovation Credit e-Tax Guide (Fifth Edition) (PDF, 1016KB).

  2. What if the repayment schedule of a hire purchase agreement straddles more than 1 basis period or extends beyond the basis period for the last qualifying YA i.e. YA 2018?

    You can continue to claim enhanced allowances on the PIC IT and automation equipment based on the repayment schedule.

    Cash payout option is only available for assets purchased under hire purchase agreements signed during the basis periods for YAs 2012 to 2018, with repayment schedules straddling 2 or more financial years.

Disclosing Errors in PIC Claims to IRAS

You must not enter into arrangements that seek to artificially inflate PIC claims. Businesses found to have over claimed PIC benefits through such abusive arrangements may face penalties for the cash payout overpaid or would have been overpaid, or tax undercharged.

If you have engaged in abusive arrangements to take advantage of the PIC scheme or have assisted others in doing so, you should disclose such arrangements to IRAS immediately. You can do so by completing the PIC Disclosure of Error Form (PDF, 692KB) and submitting it to IRAS in an envelope labelled clearly with:

  • 'PIC - Companies' for companies
  • 'PIC - Individuals' for sole-proprietorships and partnerships

Voluntary Disclosure Programme (VDP) on PIC Claims on Photocopiers

Sales/ lease packages for photocopiers typically include bundled items such as free prints, cash vouchers, among others, as well as rollovers and trade-ins. These items should be excluded from the amount that PIC is claimed on.

Learn about the Voluntary Disclosure Programme and complete the PIC Disclosure of Error Form (PDF, 692KB) if you discover errors in your claims.