• How to claim PIC from IRAS in Singapore

    Productivity and Innovation Credit Scheme, known in short as PIC Scheme, is valid up to 2018 for selected businesses, To be eligible, the businesses have to be functioning in Singapore, have at least 3 local employees, and have met the eligibility criteria in terms of business expenses and operational area. To claim a PIC cash payout in Singapore, business expenditure only up to the end of Year of Assessment (YA) 2018 is valid.

    Benefits

    PIC allows to claim deductions of up to 400% for a maximum of S$400,000 – which was extended to a maximum of S$600,000 from YA 2013 to 31 July 2016.

    You can claim exemption on PIC cash payouts for spending of up to S$100,000 in all six eligible activities. The cash compensation rate for eligible expenses that occurred after 1 August 2016 until the end of the scheme is 40%.

    Parameters for PIC Cash Payouts

    You don’t have to get any special approval from IRAS except for design projects, with regard to tax permissions or deductions. For cash compensations, you need to file PIC Cash Payout Application Form electronically. This is applicable for assessment years 2013 to 2018. The filing has to be done between the end of the relevant financial quarter and before the Income Tax Return filing due date.

    IRAS has made e-Filing compulsory for PIC cash payment beginning from 1 August 2016.

    How to Apply for PIC Cash Payout

    Here is the procedure for companies to apply for PIC cash payout:

    1. Add an authorised person for PIC Cash Payout Matters: This is applicable to companies and partnerships but not to sole proprietors. You need to nominate an employee, a partner/owner or an agent to act as the authorised person to claim PIC cash benefits for you and access e-Services when needed. This should be done through EASY – e-Services Authorisation System. EASY is available on the IRAS myTax platform. The authorisation needs to be done only once unless the nominated person leaves the company or is no longer alive.
    2. Gather all necessary information and papers: If you collect all the information needed to file a PIC cash claim, then the process will be easier and will get done in one login session itself. The information required are –
      1. Documents such as invoices, receipts and payment details for the claims you are making. You don’t have to submit these to IRAS but it has to be available in case the tax authority wants to audit them.
      2. Segregation of expenditure before and after 1 August 2016, into two categories:
        1. Expenses pre-1 August 2016 at 60% conversion rate;
        2. Expenses post-1 August 2016 to the last day of your financial year ending in 2017 at 40% conversion rate.
      3. Information about the business (such as sole proprietorship or partnership).
      4. Accounting year-end information.
      5. Accounting year during which eligible PIC expenses were incurred.
      6. YA for which PIC is being claimed.
      7. Months during which 3-local-employee criteria was satisfied.
      8. Revenue made by the company during the qualifying period.
      9. The eligible activity for which you are seeking PIC benefits.
      10. Accurate details to substantiate your claim for PIC benefits under each qualifying activity, such as:
        1. Name and Unique Entity Number of the vendor.
        2. Date of delivery.
        3. Hire purchase agreements or lease.
        4. GST details.
        5. Description of equipment.
        6. Training dates and course details for employees.
        7. Licensing details of Intellectual Property Rights.
        8. Registration details of designs, trademarks, patents, and plant varieties.
        9. Information about research and development activities.
    3. Fill up the online application form: The authorised person can log in to IRAS myTax and file the PIC cash payout application. Sole proprietors can log in without any authorised third party. Select the ‘Apply for PIC Cash Payout e-Service’ option and submit the form.

    Tips to Apply for PIC Cash Payout

    • One e-filing session lasts no longer than 20 minutes. So if the session is idle for 20 minutes or more, you will get automatically logged out and the process will have to be started again. You can, however, save the form as draft and complete it at a later stage for submission.
    • The expenditure eligibility is S$400, so if your claim is less than that for a quarter, combine it with another quarter’s details to file PIC cash payout.
    • You cannot claim more than S$100,000 per YA as PIC benefits. So if you have any claims left over from before 1 August 2016, claim those first.
    • Each form has 15 fields, so try to enter the information in a consolidated format.
    • In electronic filing, you can only make one application on a given day for each quarter or consolidated quarters of each YA. So if more than 15 fields are required for one application, you need to file another application on another day.
    • Make sure you have your e-Services Access Code. If you have lost it, request the Inland Revenue Authority of Singapore for a new one. By submitting an application through email (tpsmu@iras.gov.sg) or fax (+65 6351 4427, you will receive your new Access Code within 4 business days.

    How to Check PIC Cash Payout Status

    PIC cash payouts are generally disbursed within 3 months of IRAS getting your completed application. The earliest you can get it is 6 weeks. If your application is among those selected for a sample audit, then the process will be longer – three to six months from your application.

    You can check the status of PIC cash payout claim by logging in to the myTax portal. You can login using either your SingPass id or IRAS PIN. Go to ‘View PIC Cash Payout Application Status’ option under the ‘More’ menu. The application will be uploaded to the portal 3 business days after you submit it. The status will be recorded as ‘In Process’ up to the time IRAS approves it. If your account is being audited, the status will remain ‘In Process’ until the audit is finished.

    The status of applications can be seen for the previous assessment year, the current YA and the future two YAs.

    Role of Private Consultants in PIC

    You can nominate a third party – a tax agent or PIC consultant to handle your PIC claims. Before engaging the services of a third party, ensure that you’re checking their background and competency. Also remember that consultants will charge a fee for their services. Whether an agent or an employee files claims for you or you do it yourself, the onus of providing accurate information is on the company. It is advisable to manage your PIC matters without a third party.

    Though IRAS does not endorse any agents, the tax authority regularly conducts PIC seminars. You can also contact the IRAS any time for clarifications.

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