Following the Budget 2014 announcement, here are some of the notable tax changes.
Extension of Productivity and Innovation Credit (PIC) Scheme
To give businesses more time and certainty to put in place productivity improvements, the PIC scheme will be extended for three years till YA 2018.
For enhanced tax deductions, the expenditure cap of $400,000 per qualifying activity per YA can be combined across YA 2016 to YA 2018 (i.e. $1.2 million per qualifying activity).
For PIC cash payout, the expenditure cap of $100,000 per YA for all six qualifying activities cannot be combined across the three YAs, as is the case currently.
For enhanced tax deductions, the expenditure cap of $400,000 per qualifying activity per YA can be combined across YA 2016 to YA 2018 (i.e. $1.2 million per qualifying activity).
For PIC cash payout, the expenditure cap of $100,000 per YA for all six qualifying activities cannot be combined across the three YAs, as is the case currently.
PIC+ Scheme
The PIC+ Scheme is introduced to provide support to Small and Medium Enterprises (“SMEs”) who are making more substantial investments to transform their businesses.
Under the PIC+ scheme, the expenditure cap for qualifying SMEs will be increased from $400,000 to $600,000 per qualifying activity per YA. This means that these SMEs that invest beyond the current combined expenditure cap of $1.2 million for each qualifying activity can claim 400% enhanced tax deduction on an additional $200,000 of qualifying expenditure.
PIC+ will take effect for expenditure incurred in YA 2015 to YA2018. The combined expenditure cap will be up to $1.4 million for YA 2015, and up to $1.8 million for YA 2016 to YA 2018.
The expenditure cap for PIC cash payout will remain at $100,000 of qualifying expenditure per YA.
IRAS will release further details by end Mar 2014.
Under the PIC+ scheme, the expenditure cap for qualifying SMEs will be increased from $400,000 to $600,000 per qualifying activity per YA. This means that these SMEs that invest beyond the current combined expenditure cap of $1.2 million for each qualifying activity can claim 400% enhanced tax deduction on an additional $200,000 of qualifying expenditure.
PIC+ will take effect for expenditure incurred in YA 2015 to YA2018. The combined expenditure cap will be up to $1.4 million for YA 2015, and up to $1.8 million for YA 2016 to YA 2018.
The expenditure cap for PIC cash payout will remain at $100,000 of qualifying expenditure per YA.
IRAS will release further details by end Mar 2014.
Refining the three-local-employees condition for PIC cash payout
With effect from YA 2016, businesses applying for PIC cash payout will have to meet the three-local-employees condition for a consecutive period of at least three months prior to claiming the cash payout.
Streamlining Stamp Duty Rates for Share Transfers and Mortgages
Stamp duty rates for share transfers and mortgages will also be streamlined for transactions executed on or after 22 Feb 2014
Transfer of stock or shares - 0.2% of the purchase price or market value of the stock or shares transferred, whichever is higher
Mortgage instruments - 0.2% or 0.4% of the relevant amount (depending on the type of mortgage instrument) subject to maximum duty of $500
Transfer of stock or shares - 0.2% of the purchase price or market value of the stock or shares transferred, whichever is higher
Mortgage instruments - 0.2% or 0.4% of the relevant amount (depending on the type of mortgage instrument) subject to maximum duty of $500
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