What is tax deduction / allowances?
400% Tax Deduction/ Allowances is one of the option under Productivity and Innovation Credit (PIC) scheme where Inland Revenue Authority of Singapore (IRAS) will multiply 400% of the money that was spent on the total qualifying expenditure and then use that amount to deduct from the business’ payable tax.
Activities must be approved and qualified by Inland Revenue Authority of Singapore (IRAS) before the business is entitled to enjoy the benefits laid down by the PIC scheme.
Cash payout is another option in the PIC scheme. Business can opt for one of the choices if they feel that they can benefit from that particular scheme more than other.
Who is eligible to claim 400% tax deduction / allowances?
All businesses that are registered through Accounting and Corporate Regulatory Authority (ACRA) such as sole-proprietorships, partnerships and companies are eligible to claim 400% tax deduction / allowances.
As of from YA 2015 to YA 2018, qualified businesses would be able to claim 400% tax deduction for up to $600,000 instead of $400,000 previously.
How 400% tax deduction / allowances works?
|Year of Assessment (YA)||Expenditure Cap per|
|Tax Deduction per|
|2011 and 2012|
($800,000 x 400%)
|2013 to 2015|
($1,200,000 x 400%)
|2016 to 2018|
($1,200,000 x 400%)
ABC Company bought $10,000 worth of computers, a qualifying expenditure during financial year 2014, YA 2015. ABC Company need to pay tax amounting to $50,000 for YA 2015. Thus, by using the 400% tax deduction / allowances, calculation as per follows:
Qualifying expenditure eligible for tax deduction,
$10,000 (Computers) x 400% = $40,000
Total tax payable,
$50,000 – $40,000 = $10,000
Claiming Tax Deduction
Businesses intending to claim tax deduction in their income tax return are required to do so by the filing due date for the respective YA.
Sole Proprietorships and Partnerships have to do so by 15 April, or 18 April if they choose to use e-filing. Companies, on the other hand, are required to claim by 30 November, or 15 December if using e-filing.