Treating non-PIC qualifying expenses as PIC qualifying expenses
This is the most common mistake that I have encountered during my past employment working with SMEs, where they have incorrectly claimed PIC cash payout or enhanced deduction on non-PIC qualifying expenses.
The following are some of the more common non-PIC qualifying expenses that companies incorrectly claim:
- Software support services and warranty fee *
- Photocopier charges (Note – this is different from the monthly rental charges of photocopier machine)
- Goods and Services Tax (non-claimable if you are a GST registered company)
- Accommodation, travelling and transport expenses incurred to attend trainings (local / overseas)
* IRAS recognises that companies may need to incur maintenance fee / warranty fee when purchasing the equipment. As a concession given by the tax authority, the tax authority is prepared to accept this cost as qualifying cost on the conditions that 1) these expenses are less than 10% of the total package cost and 2) the total cost of these expenses are less than S$3,000.
Submission of incomplete PIC cash payout form
This is another common mistake made by taxpayers when they apply for PIC cash payout.
Some of the common errors made by taxpayers when completing the PIC cash payout form include;
- No authorised signature
- PIC qualifying assets / expenditures costing less than S$400
- Company fails to meet the 3 local employee condition
- Claiming cash payout on non-PIC qualifying assets / expenditures
- Claiming cash payout on assets / expenditures not incurred yet
When completing the form, please pay additional attention to ensure all details are in order and that the authorised personnel has signed and acknowledged that the PIC cash payout form is in order before submission to the IRAS.