In the 2010 budget, the Singaporean government introduced the Productivity and Innovation Credit Scheme (PIC) scheme that lets enterprises to enjoy up to 400% tax deduction/allowances or get a 60% cash payout when they invest in innovation, research and development, automation, and training.
The tax benefits under PIC are available from Years of Assessment, or YAs, 2011 to 2015, when you invest in any of its 6 qualifying activities. These qualifying PIC activities include the training of employees; acquiring and leasing of IT and automation equipment; the acquiring and in-licensing of intellectual property rights; the registration of trademarks, designs, and patents; activities involving research and development; design projects that are approved by the DesignSingapore council.
In Budget 2013, the list of prescribed PIC IT and automation equipment has been expanded to allow more equipment to qualify for PIC automatically. Among the list is “Image or graphics processing equipment, including display”, meaning that a Digital Signage system is covered under the scheme!
All SMEs are eligible for the PIC grant, which is available for up to 5 years. However, all the qualifying expenditure must be incurred between the basis periods for Years of Assessment (YA) 2011 to 2015.
If a company invests $100,000 SGD in a Digital Signage system, for example, it can chose one of two options. The company can chose a 400% tax deduction/allowance in the YA’s 2013-2015. In fact, the category “Image or graphics processing equipment, including display” allows 100% write off in one year, meaning you can knock up to $400,000 SGD off your tax bill in that year!! Expenditure of up to $400,000 SGD within one year qualifies for this.
The second option under the scheme is the “Cash Payout Option”. This allows companies to get a non-taxable 60% cash payout on Digital Signage expenditures of up to $100,000 SGD within one year. Companies can apply for this after the end of each quarter or combined consecutive quarters in the business’ financial year; Not later than the filing due date of income tax return.
Likewise, all businesses are also offered a PIC Bonus from YAs 2013 to 2015 – a dollar-for-dollar matching cash bonus offered in addition to the 400% tax benefits and 60% cash payout, subject to an overall cap of $15,000 for all 3 YAs combined.To enjoy the PIC Bonus, businesses must have made a claim for the 400% tax deductions/allowances and/or the PIC cash payout.
The company must spend over $5,000 SGD on Digital Signage in any given year to qualify for this. The cash bonus can be divided over YAs 2013 to 2015. Therefore if a company spends $9,000, on Digital Signage in 2014, it will get a $9,000 cash bonus. Subsequently in 2015, the maximum cash bonus the company can claim is $6,000 SGD ($15,000-$9,000). The entire $15,000 limit can be realised in one year, if $15,000 or more is spent on Digital Signage that year.