Income Tax – PIC+ Scheme

Pursuant to the Budget 2014, the IRAS has provided further guidance on the PIC+ Scheme whose aim is to provide SMEs with support for making more substantive investments to transform their businesses.  The following is a summary of the salient features of the PIC+ Scheme:

1.     This scheme is available from YA 2015 to 2018 to qualifying SMEs that invest in the 6 qualifying activities under the PIC scheme.  With an additional $200,000 in expenditure for each qualifying activity per YA, it will bring the expenditure cap for qualifying SMEs from $400,000 to $600,000 per qualifying activity per YA.  The combined cap for YA 2013 to 2015 will thus be $1,400,000 while the combined cap for YA 2016 to 2018 will be $1,800,000.

2.   Qualifying SMEs refer to sole-proprietorships, partnerships, and companies carrying on trade or business and whose revenue is not more than $100 million per YA or employment size is not more than 200 employees at group level.

For the purpose of the PIC+ scheme, revenue consists of trade or business income only and does not include any separate source income and the employment size will be determined as at the last day of the relevant basis period.  In addition, employees include directors and part-time employees and an individual deployed to work for an entity under a centralised hiring arrangement will be considered an employee of that entity.

IRAS has stated that in order to provide certainty to business which want to know whether they will enjoy the benefits of the PIC+ scheme at the point of making the relevant investments, they are given the flexibility to choose the basis period with which to determine whether they are qualifying SMEs in YA 2015 (based on the basis period of either YA 2014 or 2015) and in YA 2016 (based on the basis period of either YA 2015 or 2016).

3.    PIC+ Scheme does not require pre-approval.  Instead, businesses will self-assess their eligibility for the PIC+ scheme and if so, make their claim for enhanced deductions / allowances in their income tax return.

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