It was reported in IRAS’ website on 20 July 2017 that Selladorai Dharmalingam (“Selladorai”), the sole director of Al Bright Construction Pte. Ltd. (“Al Bright”), has been convicted and sentenced for abusing the Productivity and Innovation Credit (PIC) scheme by giving false information to illegally obtain a PIC cash payout and bonus for Al Bright.
IRAS’ investigation revealed that Selladorai authorized the submission of the PIC Cash Payout Application Form by Al Bright to claim $50,461.20 in PIC cash payout and $15,000 in PIC bonus, for the purported expenditure of $84,102 to purchase an electric overhead crane. However, there was no such expenditure incurred by Al Bright nor any such equipment was purchased.
Selladorai was convicted of giving false information to the Comptroller of Income Tax in order to obtain a PIC cash payout and PIC bonus which the company Al Bright was not entitled to. The court ordered Selladorai to pay a fine of $3,500 and a penalty of $100,922.40, twice the amount of PIC cash payout that Al Bright had wrongfully obtained, and sentenced him to 12 weeks’ imprisonment in default of payment.
What does this mean to you?
IRAS takes a serious view of any attempt by claimants, vendors or consultants to defraud the Government. Offenders convicted of PIC fraud will have to pay a penalty of up to four times the amount of cash payout fraudulently obtained, or which would have been obtained if the offence had not been detected, and a fine of up to $50,000 and/or imprisonment of up to five years.
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The IRAS has issued the fifth edition of the e-Tax Guide on Productivity and Innovation Credit on 22 November 2016 with a view to incorporating the Budget 2016 changes:
- Expiry of the PIC Scheme in YA 2018,
- Reduction in the PIC cash payout rate from 60% to 40% for qualifying expenditure incurred on or after 1 Aug 2016,
- Compulsory e-Filing of PIC cash payout applications with effect from 1 Aug 2016.
Other amendments include the following:
- Remove information on PIC bonus which expired after YA2015.
- The evaluation criteria for the case-by-case approval of automation equipment (see Annex A) Remove paragraph on the clarification of the basic tool criteria c. Enhanced Writing-Down Allowance (“WDA”) and Deduction for Intellectual Property Rights (“IPRs”)
- Enhancement to allow companies to make an irrevocable election to claim the WDA over a five, ten or fifteen-year period (on a straight line basis) on capital expenditure incurred in acquiring the IPR – with effect from YA 2017.
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The PIC Bonus was introduced to provide taxpayers with additional tax incentives to increase their productivity by incurring qualifying expenditure on the 6 qualifying activities. However, it has come to my attention that there are consultants out there who encourage their clients to incur expenditure on website development because of getting cash from the Singapore Government.
What are the pitfalls of the consultants’ advice? Are there requirements the taxpayers should be aware of? We are pleased to prepare the following video to help our viewers to get clarity of these concerns once and for all.
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P.S.: WHM Consulting Pte Ltd do not provide our clients with any PIC consultation as the Singapore tax authorities have warned taxpayers of engaging external consultants for PIC advice given the fact that the PIC claim is straightforward.