16 January 2015

The Inland Revenue Authority of Singapore (IRAS) has updated its website content of the Frequently Asked Questions (FAQ) for the cash payout option under the Productivity and Innovation Scheme (PIC Cash Payout).

Under the PIC Cash Payout, eligible businesses can apply to convert up to $100,000 of their total expenditure for each year of assessment (YA) in all the six qualifying activities into a non-taxable cash payout. The cash payout rate is at 60% of the expenditure incurred.

Businesses eligible to apply are sole-proprietorships, partnerships, companies (including registered business trusts) that have:

• incurred qualifying expenditure and are entitled to PIC during the basis period for the qualifying YA
• active business operations in Singapore, and
• at least 3 local employees (Singapore citizens or Singapore permanent residents with CPF contributions), excluding sole-proprietors, partners under contract for service and shareholders who are directors of the company.

In the updated FAQ, item #26 was inserted to clarify that should a sole-proprietorship owned by a company incur PIC qualifying expenditure, that sole-proprietorship will need to fulfill the 3-local-employee condition to qualify for the PIC cash payout.

This update was made on 19 December 2014.

For further details, please refer to the IRAS website.

Source: IRAS