Making the right amount of Productivity and Innovation Credit (PIC) claims to the Inland Revenue Authority of Singapore (IRAS) is crucial!
Did you know that recently on 19th September 2013, one of the company directors in Singapore landed himself into trouble for fraudulently claiming a Productivity and Innovation Credit (PIC) cash payout for his company?
He is a Director of Singapore company known as Greenit Pte Ltd. Ever since the PIC implementation in 2010, he is the first director to be charged under section 37J(4)(b) of the Income Tax Act for wilful intent to assist a company in fraud. He obtained a cash payout of $58,143.60 which was not entitled to.
As a result of this, the company was ordered to pay a fine of $10,000 plus a penalty of $232,574.40 (four times the fraudulent amount of cash payout claimed). The company director, on the hand, was jailed for these fraudulent claims.
Business Owners, are you aware that the PIC scheme was introduced for the purpose of supporting businesses who do invest in innovation and productivity improvements?
The PIC scheme allows businesses to enjoy a 400% tax deduction or 30% cash payout(YA 2011 and YA 2012) or 60% cash payout (YA 2013 to YA 2015). These are for investments under six qualifying activities.
On top of that, the PIC Bonus was introduced in Budget 2013 to provide businesses a dollar-for-dollar matching cash bonus on top of the existing PIC tax deductions and/or cash payout.
To qualify for the PIC cash payout and claims from IRAS, businesses must have the following:
a) Incurred PIC-qualifying expenditure during the basis period of the qualifying YA;
b) Active business operations in Singapore; and
c) Employed and made CPF contributions for at least three local employees. These three local employees must not be sole-proprietors, partners and shareholders who are directors of the company.
We hope this information had given you insights as to the claim of PIC with IRAS. If you are still unsure on how to claim PIC, it is best for you to seek professional help.
Remember, you do not want to get yourself or your company into trouble by making the wrong amount of PIC claims!
