In 2013, the Singapore government announced that businesses using the Productivity and Innovation Credit (PIC) scheme will enjoy a PIC Bonus. Find out more here

Productivity and Innovation

In 2013, Singapore government announced that businesses investing in any of the 6 qualifying activities under the Productivity and Innovation Credit, or PIC, scheme will enjoy a PIC Bonus.

What is so interesting about PIC Bonus?

The PIC Bonus will give you business a matching dollar-for-dollar cash bonus for the YAs 2013 to 2015, a total combined cap up to $15,000. The PIC Bonus is given in addition to the 400% tax allowances/deductions and the 60% cash payout under the PIC scheme. If your business wants to claim the PIC Bonus, then you must have also claimed for 400% tax allowances and the cash payout option beforehand.

But the PIC bonus is taxable.

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The Purpose of PIC Bonus

The PIC Bonus will allow small and medium business clear their operational costs like rentals and wages, and encourage them to improve their innovation and productivity activities. The bonus amount is determined by the expenditure that incurs on each of the PIC-qualifying activities.

The Qualifying Conditions for PIC Bonus

All businesses that are eligible for the PIC Bonus are sole-proprietorships, partnerships, and companies that have:

  1. Acquired at least $5,000 during the PIC-qualifying expenditure, particularly during the basis period of the YA where the PIC bonus is claimed.
  2. Active companies and business firms operating Singapore, and
  3. At least employing 3 local employees – Singapore citizens, or permanent residents of Singapore with CPG contributions – and excluding sole-proprietors, shareholders who are the directors of the company and partners under the contract for service

A business is said to have met the 3-local-employees condition if they contribute CPF during the payroll of at least any of its 3 local employees:

  1. Where around 400% tax allowances and deductions are claimed on qualifying PIC expenditure, particularly during the last month of the basis period to which the allowances/deductions relates.
  2. Or when the PIC cash payout option on qualifying PIC expenditure is claimed, particularly during the last month of the quarter or the combine quarters to which the cash payout option relates to.

This refers to the subsidy or the amount net of grant provided by the Government or any other statutory board.

Computing PIC Bonus

Likewise, you are also eligible to apply for PIC bonus for every dollar you will spend on qualifying activities, which is subject to at least a cap of up to $15,000 over the YAs 2013 to 2015.

Payment of PIC Bonus

Small and medium and all business do not have to apply for the PIC Bonus separately, though. They can claim the PIC Bonus along with the PIC cash payout application. On the other hand, the 400% tax deductions are claimed in the income tax return, though.

After you have filled up the income tax return, the IRAS will determine the amount you will receive as PIC Bonus for each YA. If all pre-requisite information is submitted along with the tax return, business can anticipate receiving the PIC Bonus within 3 months from the date when the income tax return was receive. From Oct 2013, the government will start to disburse the PIC Bonus.

Likewise, both sole-proprietors as well as the partnerships must submit the PIC Enhanced Allowances/Deduction Declaration form along with their income tax return. The PIC cash payout can be applied through the PIC Cash Payout Application Form.

Upon approval of the PIC cash payout, the IRAS will determine the amount of PIC Bonus your business is liable to receive.