One of the main reason is that it gives SMEs cash back on their qualifying purchases.  For SMEs, liquidity forms a major part for business continuity.

In this and the next blog posts, I will explain in more details on:

  1. How does the cash payout works;
  2. Maximum cash back for each business year;
  3. Steps to apply for the cash payout;
  4. Qualifying conditions; and
  5. Impact to your company’s tax payable

How does cash payout work

As mentioned briefly in my previous article, when your company has incurred expenses on PIC qualifying items (e.g. bought a laptop, rental of multifunctional copier machine or send your employee to training), you can elect to convert these expenses into cash.


FGH Pte Ltd rents a multi-functional copier for S$5,000 per annum.

It can choose to elect to convert the full S$5,000 into cash payout of S$3,000 under the PIC cash payout option. (S$5,000 x 60%*).

What is the maximum amount my company can receive for each business year?

The maximum qualifying expenditure that companies can elect to claim cash payout on is S$100,000. This means that the maximum cash you can get from electing the cash payout is S$60,000 (S$100,000 x 60%*) for each business year.

As mentioned previously, the capping for each qualifying activity is S$400,000 or S$1,200,000 for a combined period of 3 business years.

Companies can still elect to claim PIC enhanced deduction on the remaining qualifying activities of up to S$1,100,000 (combined capping).

*W.e.f 1 August 2016, the PIC cash payout rate is adjusted to 40%

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