Businesses can enjoy 400% tax deduction/allowances on up to $400,000 of their expenditure per year in each of the six qualifying activities, instead of the 100% deduction/allowances under the existing tax rules.
| Year of Assessment (YA) | Expenditure Cap per Qualifying Activity* | Tax Deduction per Qualifying Activity |
|---|---|---|
2011 and 2012 | $800,000 | $3,200,000 |
2013 to 2015 | $1,200,000 | $4,800,000 |
For example, a company has a “Gross Taxable Profit” of $1M. It has bought about $100K of IT equipments.
It will enjoy PIC 400% tax rebate of $400k. Thus, it lowered the taxable income to $600k.
Currently, the corporate tax is 17%. Therefore, there is a tax saving of $68k ($170k – $102) or 68% off ($68k/$100k).
In short, the company pay $32k for $100k worth of IT hardware and softwares.
Download FAQs about Productivity Innovation Credit (PIC) – Tax Deferral (Tax Rebate)