29 September 2011
On 28 September 2011, IRAS released a new “PIC Automation Equipment List” containing the list of automation equipment qualifying for enhanced deduction/allowances under the Productivity and Innovation Credit (“PIC”) scheme.
The PIC scheme was introduced in the Singapore Budget 2010 and enhanced in Budget 2011 to provide tax benefits for investments by businesses in a broad range of activities along the innovation value chain. The tax benefits under PIC will be effective from Years of Assessment (YA) 2011 to YA 2015.
The acquisition or leasing of PIC Automation Equipment is amongst the six activities along the innovation value chain that qualify for PIC benefits. The new list, “PIC Automation Equipment List” has 34 items in total, out of which, the first 29 items qualify for 100% accelerated write-off for capital allowances. The rest of the items (items 30 to 34) will qualify for write-off over 3 years under s 19A(1) and not the 100% accelerated write-off. However for all the items, claims for capital allowances can still be made under s 19 over their useful life, if preferred by the business.
Prior to this, the list of automation equipment qualifying for PIC enhanced deduction/allowances was tied to s 19A(2) Prescribed Automation Equipment Lists under the:
As the objectives of the two schemes – PIC scheme and the 100% accelerated capital allowances scheme under s 19A(2) are different, it then necessitated a separate prescribed list of automation equipment for the PIC scheme. For businesses that invest in specialised equipment not in the PIC Automation Equipment list, they may still apply to IRAS to have their equipment approved for PIC on a case-by-case basis. Details of the application procedure and criteria for approval is expected to be released by IRAS by end October 2011.
The PIC Automation Equipment List will be gazetted under a new provision proposed in the Income Tax (Amendment) Bill 2011 to take effect from the YA 2011. As Parliament has yet to approve the proposed amendment, the list of PIC Automation Equipment will be subject to Parliament’s validation of the proposed amendment.
Source: Source: This article was extracted from the Inland Revenue Authority of Singapore (IRAS) website.