What are the qualifying expenditure for investment in automation equipment?
The purchase and leasing of PIC IT and Automation Equipment qualify for PIC.
The expenditure cap is applied to both expenditure incurred on acquisition and leasing of PIC IT and Automation Equipment.
Can installation costs incurred on the automation equipment qualify for PIC?
If the installation costs (for example site preparation, delivery, assembly costs, etc) have been incurred as part of the costs of acquiring the equipment, they would qualify for PIC.
If I purchase a piece of second-hand PIC IT and Automation Equipment, will it qualify for PIC?
Yes, second-hand automation equipment will qualify for PIC.
Can I still claim capital allowances on equipment purchased if I am claiming PIC?
With the PIC, you can claim an additional allowance of 300% on the cost of the PIC IT and Automation Equipment, making up a total PIC of 400% on the cost of the equipment.
If you have opted for the cash payout, the qualifying cost of the equipment will be converted into cash payout, subject to the cash payout cap. There will be no further deduction of capital allowance and enhanced allowance for the same piece of automation equipment.
Must I claim enhanced allowance on the cost incurred for purchase of PIC IT and Automation Equipment on a “per equipment basis”?
Generally, enhanced capital allowances (“CA”) is granted on the full cost of the equipment. However, if the total expenditure incurred on the provision of automation equipment exceeded the expenditure cap, you can claim enhanced CA on the partial cost of one piece of equipment. If you opt to convert the qualifying expenditure into a cash payout, partial conversion is not allowed and conversion has to be done on a “per equipment basis” on the full cost of the automation equipment. Where the qualifying expenditure of the equipment is greater than the amount qualifying for cash payout conversion, the excess expenditure incurred will be forfeited and will not be available for capital allowance claim against the business income.
Can I defer the claim for enhanced allowance (i.e. 300%) but continue to claim the base allowance (i.e. 100%) of automation equipment purchased in the YA?
No. The enhanced allowance has to be claimed and allowed together with the base allowance.
Will I qualify for PIC if I lease PIC IT and Automation Equipment for use in my business?
Yes. The lease payment incurred on PIC IT and Automation Equipment will qualify for PIC provided the equipment is not onward leased to another party during the same basis period. Expenditure on both the purchase and lease of PIC IT and Automation Equipment will be capped under one combined activity.
Will equipment under a sale and lease-back arrangement qualify for PIC?
Expenditure incurred in respect of equipment under a sale and lease-back arrangement would not qualify for enhanced deduction if capital allowance has previously been allowed for that equipment prior to the sale and lease-back arrangement.
Will expenditure incurred on cloud computing qualify for PIC?
Yes, expenditure incurred on procuring cloud computing services will qualify for enhanced deduction for PIC purposes. Notwithstanding the above, as payments for cloud computing are payments for services, withholding tax would apply if such payments are made to non-residents for services rendered in Singapore.
Do I need to give a breakdown of the cloud computing payment?
No. The full cloud computing payment will qualify for PIC.
I am a cloud computing vendor. Will my expenditure incurred on PIC IT and Automation Equipment used in the provision of cloud computing services to my customers qualify for PIC?
Expenditure incurred to acquire/lease hardware
The expenditure you incurred to acquire/lease PIC IT and Automation Equipment (hardware) will qualify for PIC.
Expenditure incurred to acquire/lease software
Your expenditure to acquire/lease software will not qualify for PIC. Only the cloud computing customers, who are the end-users of the software, can claim the PIC benefits.
Expenditure incurred to develop software
If you develop the software, you can claim PIC on qualifying expenses incurred to develop the software provided the project qualifies as Research and Development.
Will expenditure incurred on upgrading of software fall under PIC IT and Automation Equipment?
Yes, expenditure incurred on software upgrades qualifies for enhanced allowance.
Will expenditure incurred on leasing of office system software qualify for PIC?
Yes, expenditure incurred on leasing of office system software will qualify for enhanced deduction.
Does purchase of software (e.g. shrink-wrap software) qualify for PIC?
Yes, the cost of purchase will qualify for the enhanced allowances.
Do fees paid for maintenance of software qualify for PIC?
Payments for maintenance of software (e.g. debugging, help desk support) will not qualify for PIC. You can continue to claim deduction of such maintenance fees under the current rules.