Transcription

1 Productivity and Innovation Credit () Scheme 1 Outline Productivity and Innovation Credit () Scheme Overview Tax Benefits How to Claim Tax Deferral Option Details on What Qualifies for - Automation Equipment - Training of Employees 2 1

2 Overview of Scheme Introduced in Budget 2010 and enhanced in Budget 2011 and 2012 Encourage businesses to invest in productivity and innovation All businesses benefit, especially SMEs - Either get a cash payout or claim tax deduction 3 Overview of Scheme 6 activities covered under the scheme: Training of Employees Purchase/Lease of Automation Equipment Acquisition of Intellectual Property Registration of Intellectual Property Research & Development Approved Design Project 4 2

3 Tax Benefits under 400% tax deduction/allowances on expenditure on each of the 6 activities (YAs 2011 to 2015) Opt for cash payout in place of tax deduction/allowances (YAs 2011 to 2013 but extended to 2015 after enhancement from Budget 2012) 5 Tax Deduction / Allowances 400% tax deduction/allowances on up to $400,000 expenditure per year in each of the 6 activities To allow max benefits, the spending cap across YAs for each activity is as shown below: Years of Assessment 2011 and 2012 (Combined) 2013 to 2015 (Combined) Expenditure cap per activity Tax Deduction per activity $800,000 $3,200,000 (400% x $800,000) $1,200,000 $4,800,000 (400% x 1,200,000) For newly incorporated/registered businesses whose 1 st YA is YA 2012, the expenditure cap per activity is $400,000 Expenditure is net of grant or subsidy Expenditure exceeding the cap can still enjoy deduction based on existing rules 6 3

4 Tax Deduction / Allowances Potential Maximum Benefits for YAs 2011 & 2012 combined Deduct up to $19.2m (400% x $800,000 x 6 activities) R&D IP Acquisition Training 400% deduction/allowances on up to $800K expenditure IP Registration Automation Design 7 Tax Deduction / Allowances Example (YA 2012) Expenditure on staff training = $900,000 $100,000 Total tax deduction = $3,300,000 $100,000 (remain 100% deduction) $800,000 $3,200,000 (400% x $800,000) 8 4

5 Cash Payout Option Option to convert expenditure of up to $100,000 in all 6 activities per YA At 30% conversion rate Expenditure converted is not tax deductible $100,000 $30,000 Expenditure Cash Payout With effect from YA 2013, conversion rate is at 60% Cash payout is non-taxable 9 Cash Payout Option Year(s) of Assessment Expenditure cap for all 6 activities Maximum cash payout 2011 and 2012 (Combined) For each YA (Enhancement from Budget 2012) $200,000 $60,000 (30% x $200,000) $100,000 $60,000 (60% x $100,000) For newly incorporated/registered businesses whose 1 st YA is YA 2012, the expenditure cap for all 6 activities is $100,

6 Cash Payout Option Conditions for cash conversion Employed at least 3 local employees (Singapore Citizens or PRs with CPF contributions) in the last month of accounting period With effect from YA 2013, the 3 local employees condition must be fulfilled for the last month of the quarter or combined quarters in the basis period for the relevant YA (Enhancement from Budget 2012) Carrying on business operations in Singapore Note: Employees exclude sole-proprietors, partners under contract for service, shareholders who are also directors of companies 11 How to Claim 400% tax deduction Cash payout Applicable YA How YAs 2011 to 2015 Claim tax deduction/allowances in income tax return YAs 2011 to 2015 (enhanced after Budget 2012) Submit cash payout application form (available on IRAS website) When For company, submit income tax return by the filing due date: 30 Nov For sole-proprietor/partnership, submit income tax return and declaration form by the filing due date: 15 Apr YA : Anytime after accounting yearend but not later than the income tax filing due date. YA : From 15 Apr 2012 onwards, businesses can claim cash payout on a quarterly basis 12 6

7 Tax Deferral Option Objective is to help businesses with their cash flow and investments in productivity Amount of tax that can be deferred the lower of: the tax payable assessed for the current YA; the qualifying expenditure incurred in the current accounting year; and Capped at $100,000. Deferred tax is due when we assess the next YA s tax Businesses can continue to apply for Cash Payout or claim deductions in their tax returns for relevant YA 13 Example Tax Deferral Option Incurred $80,000 on Staff training Claim $80,000 deductions in YA2013 return Jan 2012 Paid $200,000 YA 2012 tax Dec 2012 Apply for $80,000 YA 2012 tax to be deferred -> $80,000 will be refunded within 30 days Pay $80,000 YA 2012 deferred tax with YA 2013 tax Dec

8 Tax Deferral Option Election is available for tax payable for YAs 2011 to 2014 based on expenditure incurred in the corresponding accounting years 2011 to 2014 Businesses need to: Submit the Tax Deferral Form (available on IRAS website) to IRAS Anytime after they have incurred qualifying expenditure but no later than the end of the current accounting year-end This option effectively allows businesses to enjoy their tax savings in advance 15 Most SMEs would have some spending on: - Purchase of Automation Equipment - Staff Training 16 8

9 Automation Equipment 17 Purchase/Lease of Automation Equipment Automation equipment that qualify for with effect from YA 2011 are prescribed in the Automation Equipment List Both purchase and leasing (only for own use) of automation equipment qualify for One expenditure cap applies for both purchase cost and lease payments: $800,000 for YAs 2011 and 2012 combined; and $1,200,000 for YAs 2013 to 2015 combined 18 9

10 Automation Equipment Facsimile Optical character reader Laser printer Mainframe/Computers Milling machines Office system software Automatic storage and retrieval system of warehouses Injection mould machines Automotive navigation systems Automated kitchen equipment for the purpose of food processing Interactive shopping carts Automated housekeeping equipment Automated seating systems for convention or exhibition centre Self-climbing scaffold system Concrete pumps 19 Automation Equipment Case-by-case approval Announced on 31 Oct 2011 Businesses that invest in specialized equipment not in the Automation Equipment List may apply to IRAS to have their equipment approved for on a case-by-case basis Criteria are: a) Equipment automates current core work processes of the business; b) Equipment enhances productivity of the principal trade of the business such as reduced man-hours and/or improvement in existing work processes; and c) Equipment is not a basic tool used in the industry of the business Businesses can: submit the Application for Automation Equipment Form (available on IRAS website) to IRAS two months before the return filing due date or earlier 20 10

11 Automation Equipment Cash conversion option Election is on per equipment basis (cannot claim tax deduction and cash payout on the same equipment) Expenditure in excess of conversion cap forfeited Hire purchase equipment with repayment covering 2 or more basis periods not eligible for cash conversion Enhancement from Budget With effect from YA 2012, hire purchase equipment with repayment covering 2 or more basis periods are eligible for cash conversion 21 Automation Equipment Example: For YA 2012 claim for Enhanced Allowance Computer $5,000 Total Allowance 400% x $5,000 = $20,000 OR Cash Payout Tax Savings: $3,400 ($20,000 x 17%*) Enjoy 68% $3,400 of $5,000 savings on computer If you opt to convert the cost of computer of $5,000 into cash payout, the cost cannot be claimed as a deduction against your income. Convert to cash payout Receive $1,500 cash (30% x $5,000) *Based on YA 2012 corporate tax rate of 17% 22 11

12 Automation Equipment Minimum ownership period Minimum 1-year holding for purchased equipment Claw-back of allowances or cash payout may apply if equipment disposed of or leased out within 1 year from date of purchase Waiver of claw-back provisions Automatic waiver: If in the basis period when the equipment was acquired, the cost of qualifying equipment acquired (excluding the cost of equipment disposed of) is more than or equal to the expenditure cap applicable to that basis period Case-by-case basis: If IRAS is satisfied with the commercial reason(s) that led to the disposal 23 Automation Equipment Example - Automatic waiver Acquired $1,000,000 worth of qualifying equipment in Jun 2010 (Enhanced allowances claimed in YA $800,000) Holding period less than one year Jan 2010 Dec 2010 Dec 2011 Disposed of equipment costing $100,000 in Jan 2011 Claw-back provisions automatically waived as cost of remaining qualifying equipment of $900,000 ($1 mil - $100K) is higher than expenditure cap of $800,

13 Training of Employees 25 Training of Employees External training All external training qualify Qualifying Expenditure Includes Course fees to any external training service provider E.g. registration or enrolment fees, examination fees, tuition fees and aptitude test fees Rental of external training premises Meals and refreshments provided during the courses Training materials and stationery Qualifying Expenditure Excludes Accommodation, travelling and transport expenses of employees attending the training Overheads like imputed rental and utilities 26 13

14 Training of Employees In-house training Qualifying training programmes: (a) Workforce Skills Qualification (WSQ) training courses accredited by the Singapore Workforce Development Agency and conducted by a WSQ inhouse training provider; (b) courses approved by the Institute of Technical Education (ITE) under the ITE Approved Training Centre scheme; and (c) on-the-job training by an on-the-job training centre certified by ITE Enhancement from Budget 2012: (a) With effect from YA 2012, non-wda accredited and non-ite approved in-house training courses also qualify for claim; and (b) Amount of expenditure is capped at $10,000 and cannot be combined across YAs. 27 Training of Employees In-house training Qualifying Expenditure Includes Salaries and other remuneration (excluding director fees) paid to inhouse trainers for course delivery Rental of external training premises Meals and refreshments provided during the courses Training materials and stationery Qualifying Expenditure Excludes Salaries and other remuneration paid to in-house trainers for other duties including preparation of training material Salaries and other remuneration paid to employees providing administrative support Absentee payroll Accommodation, travelling and transport expenses Overheads like imputed rental and utilities 28 14

15 For More Information on the Scheme Visit IRAS website at Businesses > For Companies (including Productivity and Innovation Credit scheme) 29 Thank You 15