The PIC scheme provides taxpayers with 2 options for expenses incurred on qualifying expenditures.
The 2 options are:
- PIC cash payout – 60%* reimbursement of cash incurred on qualifying expenditure / assets
- Enhanced deduction / capital allowance – Additional 300% tax saving on qualifying expenditure / assets
Companies can only elect either 1 of the options with regards to the expenses incurred on the qualifying activities. This means that you can only get either cash back or use the expenses to less off your company’s tax payable.
However, you can elect different options for different expenses incurred. Confused? Read on the following example.
- EFG Pte Ltd sends its employee to 2 courses:
Course A – $500
Course B – $300
EFG Pte Ltd can choose to claim PIC cash payout on course A of $500 (cash back of $300) and enhanced tax deduction on course B of $300 (additional tax deduction of $900).
- EFG Pte Ltd bought 2 laptops:
Orange brand – $1,000
Samshout brand – $800
EFG Pte Ltd can choose to claim PIC cash payout on Orange brand laptop of $1,000 (cash back of $600) and enhanced tax deduction for Samshout brand laptop of $800 (additional tax deduction of $2,400).
Hence, from the above examples, you can see that each individual qualifying expenses and assets are treated separately and PIC enhanced deduction or cash payout can be elected for each individual qualifying expenses and assets.
*W.e.f. 1 August 2016, PIC Cash payout rate is adjusted to 40%