FREQUENTLY ASKED QUESTIONS

ON PRODUCTIVITY AND INNO VATION CREDIT (PIC)

- Acquisition or Leasing of PIC IT and Automation Equipment
- Training of Employees
(Updated on 13 Oct 2014)
___________________________________________________________________________

A1. Enhanced Tax Allowances/Deductions for Acquisition/Leasing of PIC IT and Automation Equipment ....... 3
A. Overview of PIC IT and Automation Equipment .............................................................................................. 3
Revised on 13 Oct 2014
1. What are the qualifying expenditure for investment in automation equipment? .. 3
2. Can installation costs incurred on the automation equipment qualify for PIC? ............................... 3
3. Do I need to apply for my equipment to be considered as PIC IT and Automation Equipment, so
that it can qualify for PIC? ................................................................................................................. 3
4. If a piece of equipment that will automate processes and enhance productivity is not in the PIC IT
and Automation Equipment List, can I still claim for enhanced allowance or opt for a cash payout?
3
5. For subsequent purchases of similar equipment (whether for replacement or as an additional
acquisition) which IRAS had previously approved for PIC on a case-by-case basis, do I still need to
New (Updated on 22 Sep 2014)
submit another application to have the new equipment approved for PIC? .. 3
6. If I purchase a piece of second-hand PIC IT and Automation Equipment, will it qualify for PIC? ..... 4
7. Will equipment purchased for use overseas by the company itself or persons other than the
company (e.g. subcontractor) qualify for PIC? .................................................................................. 4
8. Can I still claim capital allowances on equipment purchased if I am claiming PIC? .......................... 4
9. Must I claim enhanced allowance on the cost incurred for purchase of PIC IT and Automation
Equipment on a “per equipment basis”? .......................................................................................... 4
10. 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? ........................................... 4
11. Will I qualify for PIC if I lease PIC IT and Automation Equipment for use in my business? ............... 4
12. Will equipment under a sale and lease-back arrangement qualify for PIC? ..................................... 5
B. Equipment in PIC IT and Automation Equipment List ..................................................................................... 5
13. Can you provide a description of interactive shopping carts or kiosks under item 23 of the PIC IT
and Automation Equipment List?...................................................................................................... 5
14. What are some examples of automated kitchen equipment falling under item 22 of the PIC IT and
Automation Equipment List - “Automated kitchen equipment for the purpose of food processing,
food preparation or for food and beverage-related operations”? ................................................... 5
15. Does item 35 of the PIC IT and Automation Equipment List apply only to the building and
construction industry - “Construction equipment proposed and supported by the Building and
Construction Authority”? .................................................................................................................. 5
16. What are some examples of automated equipment falling under item 36 of the PIC IT and
Automation Equipment List - “Automated equipment for cleaning, scrubbing, shampooing or
cleaning-related operations in relation to the maintenance of premises”? ..................................... 5
C. Cloud computing payment .............................................................................................................................. 6
17. Will expenditure incurred on cloud computing qualify for PIC? ....................................................... 6
18. Do I need to give a breakdown of the cloud computing payment? .................................................. 6
19. 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? ... 6
D. Software .......................................................................................................................................................... 6
20. Will expenditure incurred on upgrading of software fall under PIC IT and Automation Equipment?
6
21. Will expenditure incurred on leasing of office system software qualify for PIC? ............................. 6
22. Does purchase of software (e.g. shrink-wrap software) qualify for PIC? .......................................... 6
23. Do fees paid for maintenance of software qualify for PIC? .............................................................. 6
24. Can my business claim enhanced allowance on the development of software in Singapore? ......... 7
Revised on 13 Oct 2014
25. Can website development costs and web hosting fees qualify for PIC? .................. 7
E. Equipment acquired on hire purchase ............................................................................................................ 7

Page 1 of 13
 26. For automated equipment bought on hire purchase, how do I compute the enhanced allowance
under PIC? ......................................................................................................................................... 7
27. What if the repayment schedule of a hire purchase agreement straddles more than one basis
period or extends beyond the basis period for the last qualifying YA (i.e. YA 2018)? ...................... 7
F. Equipment qualifying for investment allowance ............................................................................................. 8
28. Can I claim PIC for equipment that qualifies for investment allowance? ......................................... 8
G. Disposal of equipment..................................................................................................................................... 8
29. How do I compute the balancing adjustment and cash payout to be recovered if I dispose of my
PIC IT and Automation Equipment within 1 year? ............................................................................ 8
30. Can the claw-back provision be waived if I disposed of my PIC IT and Automation Equipment
within 1 year? .................................................................................................................................... 8

A2. Enhanced Tax Deductions for Training of Employees ............................................................................................. 9

31. What training expenditure can qualify for enhanced tax deduction under PIC?.............................. 9
32. What are some examples of internal training that qualify for PIC without the need for external
certification? ................................................................................................................................... 10
33. What documents are required to support the claim for PIC on training expenditure? .................. 10
34. Do training costs pertain only to local employees or all employees? ............................................. 11
35. Do training costs incurred for overseas trainings or seminars qualify for PIC? .............................. 11
36. What are the allowable training costs for in-house training? ......................................................... 11
37. What are the allowable training costs for courses conducted by external training provider? ....... 11
38. When computing the enhanced deduction on training expenditure, should the qualifying
expenditure incurred be net of Absentee Payroll funding? ............................................................ 12
39. Are air fare and accommodation costs of the external trainer allowable for PIC? ......................... 12
40. The overseas course fees charged by the service provider included accommodation and airfare
for my staff attending but there is no breakdown for charges provided in the invoice. Can my
company claim the full amount of the billing under PIC? ............................................................... 12
41. For outsourced training, must the external trainer be a certified trainer? .................................... 12
42. My holding company conducts training for my employees. Is this considered in-house or
outsourced training and will the training expenses qualify for PIC? ............................................... 12
43. If I need to send my employees for training to use a software that I have recently purchased, will
the training expenses incurred qualify for PIC? .............................................................................. 12
44. My employees have to take an examination after the course. Do they have to pass the
examination before I can claim PIC on the training expenses? ...................................................... 12
45. My employees have undergone an examination that required self-study but no training was
involved. Can my business claim PIC on the examination fees incurred?....................................... 12
46. Can training costs incurred by a sole-proprietor/partner qualify for PIC?...................................... 13
47. We are a real estate agency company and we provide training to our agents who are not our
employees. Will the training costs that we incurred qualify for PIC? ............................................ 13
48. Under a group centralised hiring system*, an employee (Mr X) who had a contract with the
group’s central hirer (Business A) was deployed to work solely for a related party, Business B.
Business B was then recharged with employment costs (including CPF contributions) by Business
A for Mr X. Business B provided training to Mr X for the purposes of its trade/business. Can Mr X
be treated as an employee of Business B, for which Business B can make a claim for PIC on the
training costs it incurred on Mr X? .................................................................................................. 13

Page 2 of 13
A1. Enhanced Tax Allowances/Deductions for Acquisition/Leasing of PIC IT and Automation
Equipment

A. Overview of PIC IT and Automation Equipment

1. What are the qualifying expenditure for investment in automation equipment? Revised on 13 Oct 2014

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.

From YA 2016, to qualify for cash payout on PIC IT and Automation equipment, businesses will
need to show that the equipment is in use by the business at the point when they elect for cash
payout. This condition reinforces the objective of encouraging businesses to increase their
productivity by using automation equipment in their businesses. For businesses with genuine
cash-flow difficulties and are not able to secure the delivery of the equipment before payment is
made, IRAS may waive the requirement for the equipment to be “in use” on a case-by-case basis,
subject to conditions.

2. 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.

3. Do I need to apply for my equipment to be considered as PIC IT and Automation Equipment, so

that it can qualify for PIC?

No. There is no need to make any application for the equipment to be considered as PIC IT and
Automation Equipment. You can make a claim for PIC as long as the equipment falls within
the PIC IT and Automation Equipment List.

4. If a piece of equipment that will automate processes and enhance productivity is not in the PIC
IT and Automation Equipment List, can I still claim for enhanced allowance or opt for a cash
payout?

You may apply to IRAS to have your equipment approved for PIC on a case-by-case basis. You
should not claim enhanced allowance or opt for a cash payout until approval has been granted.

5. For subsequent purchases of similar equipment (whether for replacement or as an additional

acquisition) which IRAS had previously approved for PIC on a case-by-case basis, do I still need
to submit another application to have the new equipment approved for PIC? New (Updated on 22 Sep
2014)

Yes, you are still required to submit another application to have your new equipment approved
for PIC even though IRAS had previously approved a similar equipment for PIC. This is necessary
because each application is assessed based on whether the equipment met the criteria (i.e.
automates/ mechanises work processes and enhances productivity of the business) at that
point of time. Nonetheless, IRAS will take into consideration that a similar equipment had been
previously approved for PIC.

Page 3 of 13
6. 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.

7. Will equipment purchased for use overseas by the company itself or persons other than the
company (e.g. subcontractor) qualify for PIC?

The company will qualify for PIC benefits if the PIC IT and Automation Equipment is used by the
company for the purpose of its trade or business.

Where the PIC IT and Automation Equipment is placed with an overseas subcontractor in an
outsourcing arrangement for the purpose of providing manufacturing services to the company,
the cost incurred by the company to purchase the equipment will qualify for PIC if:
- the equipment is used exclusively for the manufacture of the company’s products; and
- the company maintains control over the equipment used by the subcontractor (including
maintenance of the equipment).

For more information, please refer to Tax treatment of capital allowance for plant and
machinery used by persons other than your company.

8. Can I still claim capital allowances on equipment purchased if I am claiming PIC?

Through PIC, you can claim an additional allowance of 300% on the cost of the PIC IT and
Automation Equipment, making up a total PIC claim 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.

9. 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.

10. 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.

11. 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.

Page 4 of 13
 Expenditure on both the purchase and lease of PIC IT and Automation Equipment will be capped
under one combined activity.

12. 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.

B. Equipment in PIC IT and Automation Equipment List

13. Can you provide a description of interactive shopping carts or kiosks under item 23 of the PIC
IT and Automation Equipment List?

Interactive shopping carts or kiosks can act as shopping assistants to customers in a supermarket
or mall to assist them to locate a certain product or shop.

14. What are some examples of automated kitchen equipment falling under item 22 of the PIC IT
and Automation Equipment List - “Automated kitchen equipment for the purpose of food
processing, food preparation or for food and beverage-related operations”?

Examples of automated kitchen equipment under item 22 include:

- Automatic deep fryer/noodle boiler/wok
- Automatic meat slicer
- Automatic packaging machine
- Blast chiller/freezer
- Combi oven
- Dishwasher
- Stone milling machine used to grind ingredients into paste/sauces
- Vacuum sealing machine
- Vegetable cutting/peeling machine

15. Does item 35 of the PIC IT and Automation Equipment List apply only to the building and
construction industry - “Construction equipment proposed and supported by the Building and
Construction Authority”?

No. The list of equipment under item 35 is not restricted to the building and construction
industry. As long as the equipment is listed under item 35 and used in the business (albeit not
related to building and construction), it can qualify for PIC.

16. What are some examples of automated equipment falling under item 36 of the PIC IT and
Automation Equipment List - “Automated equipment for cleaning, scrubbing, shampooing or
cleaning-related operations in relation to the maintenance of premises”?

Examples of automated equipment under item 36 include:

- Carpet shampoo machine
- Push-behind or ride-on auto scrubber
- Ride-on sweeper

Page 5 of 13
 C. Cloud computing payment

17. 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.

18. Do I need to give a breakdown of the cloud computing payment?

No. The full cloud computing payment will qualify for PIC.

19. 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.

D. Software

20. Will expenditure incurred on upgrading of software fall under PIC IT and Automation
Equipment?

Yes, expenditure incurred on software upgrades qualifies for enhanced allowance.

21. 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.

22. Does purchase of software (e.g. shrink-wrap software) qualify for PIC?

Yes, the cost of purchase will qualify for the enhanced allowances.

23. Do fees paid for maintenance of software qualify for PIC?

Payments for maintenance of software (e.g. debugging, helpdesk support) will not qualify for PIC.
You can continue to claim deduction of such maintenance fees under the current rules.

Page 6 of 13
24. Can my business claim enhanced allowance on the development of software in Singapore?

If the software is developed for business use, enhanced allowance can be claimed on the
development costs.

25. Can website development costs and web hosting fees qualify for PIC? Revised on 13 Oct 2014

For website development costs:

From YA 2014 to YA 2018
PIC benefits may be claimed on capital expenditure incurred on developing a website, including
costs incurred for the one-time registration of a domain name for the website.

From YA 2011 to YA 2013

Website development costs do not qualify for PIC benefits. However, if you are able to give a
breakdown of the website development costs, PIC benefits may be granted on costs incurred for
software application and hardware such as server, which are included in the PIC list.

For web hosting fees:

Fees paid for web hosting services do not qualify for PIC benefits. However, if you are able to
provide a breakdown of the web hosting fees, PIC benefits may be granted on costs incurred for
the acquisition/leasing of PIC IT and Automation Equipment such as software and server.

E. Equipment acquired on hire purchase

26. For automated equipment bought on hire purchase, how do I compute the enhanced
allowance under PIC?

The enhanced allowance will be computed up-front based on the full cost of equipment. The full
cost of the equipment (instead of repayment made during the basis period) will be used for the
purpose of computing the expenditure cap for the relevant YA. Thereafter, the enhanced
allowance will be allowed proportionately to the business based on the actual principal
repayment made during the year. This does not include interest cost incurred for the hire
purchase.

For a computation of the enhanced allowances on equipment acquired on hire purchase, you
can refer to Annex A-1 of the “Productivity and Innovation Credit e-Tax Guide”.

27. What if the repayment schedule of a hire purchase agreement straddles more than one basis
period or extends beyond the basis period for the last qualifying YA (i.e. YA 2018)?

You can continue to claim enhanced allowance on the PIC IT and Automation Equipment based
on the repayment schedule.

Cash payout option is only available for assets purchased under hire purchase agreements
signed during the basis period for YA 2012 to YA 2018, with repayment schedule straddling two
or more financial years. For more details, please refer to Question 16 of our FAQs on Cash
Payout.

Page 7 of 13
 F. Equipment qualifying for investment allowance

28. Can I claim PIC for equipment that qualifies for investment allowance?

Yes, but you cannot claim both investment allowance and enhanced allowance on the same
dollar of the asset cost incurred. Investment allowance can be claimed on the portion of the
asset cost that does not qualify for enhanced deduction (e.g. remaining cost of the equipment
exceeding the expenditure cap).

G. Disposal of equipment

29. How do I compute the balancing adjustment and cash payout to be recovered if I dispose of
my PIC IT and Automation Equipment within 1 year?

If enhanced allowances/deduction claimed previously:

For equipment that is disposed of within a year with enhanced allowance claim, balancing
adjustments will be computed as per current tax rules on the base allowance of 100%. The
enhanced allowance of 300% granted will be deemed as income chargeable to tax in the year of
disposal, unless the disposal/lease comes within the auto-waiver from claw-back provisions (see
Question 30).

You are required to submit the Disposal of Qualifying Assets Form together with your Income
Tax Return for the Year of Assessment in which the asset was disposed of by the filing due date
(15 Apr for sole-proprietorship and partnership and 30 Nov for company)

If cash payout has been claimed previously:

For equipment that is disposed of within a year with cash payout claimed, the cash payout will
be fully recovered, unless the disposal/lease comes within the auto-waiver from claw-back
provisions (see Question 30). No balancing adjustment needs to be computed.

You are required to submit the Disposal of Qualifying Assets Form to IRAS within 30 days from
the date of lease/disposal, and repay the cash payout upon receipt of IRAS' Productivity &
Innovation Credit Cash Payout Recovery notice.

30. Can the claw-back provision be waived if I disposed of my PIC IT and Automation Equipment
within 1 year?

The claw-back/recovery provision can be waived under the following circumstances:

a) Waiver will be given automatically:

If in the year of disposal, the cost of remaining qualifying equipment (excluding cost of the
equipment disposed of) acquired in the same basis period as the equipment disposed of
is more than or equals the expenditure cap applicable for the period. You only need to make
this declaration in your tax return. There is no need to apply or get prior approval of the
waiver.

Example:

Page 8 of 13
 Company A acquired $1,300,000 worth of qualifying equipment during its accounting year
ended 31.12.2012. It claims enhanced allowances on equipment cost of $1,200,000 (which
is the combined expenditure cap for YA 2013 to YA 2015) in its return for YA 2013).

In Oct 2013 (YA 2014), it disposed of a piece of qualifying equipment with a cost of $80,000
which it acquired in year 2012 and claimed enhanced allowances of $240,000 (300% x
$80,000) in YA 2013.

As the cost of the remaining qualifying equipment is $1,220,000 ($1,300,000 - $80,000) and
this is higher than the expenditure cap of $1,200,000, the enhanced allowances of $240,000
will not be clawed back (i.e. $240,000 will not be deemed as income chargeable to tax in the
year of disposal).

b) Waiver will be considered on a case-by-case basis:

Where in the year of disposal, the cost of remaining qualifying equipment acquired in the
same basis period as the equipment disposed of is less than the expenditure cap applicable
for the period and IRAS accepts your commercial reason(s) for the disposal.

You may apply to IRAS by:

Where enhanced allowance was claimed previously:

submitting the Disposal of Qualifying Assets Form together with your Income Tax Return for
the Year of Assessment in which the asset was disposed of by the filing due date (15 Apr for
sole-proprietorship and partnership; and 30 Nov for company).

Where cash payout and/or PIC bonus have been granted previously:
submitting the Disposal of Qualifying Assets Form to IRAS within 30 days from the date of
disposal.

The cash payout and/or PIC bonus have/has to be repaid within 30 days from the date of the
PIC Cash Payout Recovery notice or PIC Bonus Recovery notice, otherwise, late payment
penalties may apply.

A2. Enhanced Tax Deductions for Training of Employees

31. What training expenditure can qualify for enhanced tax deduction under PIC?

The qualifying training expenditure are:

a. Outsourced training – course fees paid to the external training service provider.

b. In-house training (conducted by the employees of the businesses) - expenditure incurred in

relation to the provision of:

i) Workforce Skills Qualification (WSQ) training courses accredited by the Singapore

Workforce Development Agency (WDA) and conducted by a WSQ in-house training
provider;

ii) courses approved by the Institute of Technical Education (ITE) under the ITE Approved
Training Centre scheme; or

Page 9 of 13
 iii) on-the-job training by an on-the-job training centre certified by ITE.

For YA 2012 to YA 2018, qualifying training expenditure incurred on in-house training not
accredited by the Workforce Development Agency (WDA) or approved/certified by the
Institute of Technical Education (ITE) will also qualify for enhanced deduction under PIC,
subject to a cap of $10,000 for each YA. The claim must still be within the overall
expenditure cap on training.

For YA 2011, businesses have to ensure that their in-house training is WDA-accredited or
ITE-approved/certified training course before claiming enhanced tax deduction under PIC.

For more information on the schemes administered by WDA & ITE, please refer to WDA’s
website (www.wda.gov.sg) and ITE’s website (www.ite.edu.sg).

The qualifying training costs are computed net of any grant or subsidy from the Government or
statutory boards.

32. What are some examples of internal training that qualify for PIC without the need for external
certification?

Some examples of internal training that may qualify for PIC without external certification are:

1. Training on the operation of specialised equipment(s) with the help of instruction manuals;
2. Training on a business’ operating processes and functions in a group setting, with prepared
materials and handouts;
3. Training to help develop necessary skill sets such as regular sessions on customer service.

Spontaneous consultation, day-to-day problem solving or meetings and coaching/mentoring

sessions between supervisors and subordinates will not qualify for PIC.

33. What documents are required to support the claim for PIC on training expenditure?

Please keep proper records and documents of your training expenditure to support your claims
for PIC. These include:

(a) For In-house training not certified by WDA or ITE:

1. Name of course/ training
2. Exact date(s), duration and venue of course/ training
3. Full name, designation and qualification of trainer(s)
4. Full name, identification number (e.g. NRIC), designation and employment period of
trainee(s)
5. Course objectives, course outline and a copy of the course handout or training manual
6. Basis and computation of how the training cost was arrived at
7. Itemised breakdown of qualifying expenditure with supporting documents (e.g.
timesheet maintained by the trainer(s))

(b) For In-house training certified by WDA or ITE:

7. Items 1. to 7. under (a)
8. A copy of the certification letter issued by the relevant agencies (WDA or ITE)

Page 10 of 13
 (c) For External training
5. Items 1. to 5. under (a)
6. A copy of invoice
7. Evidence of payment (e.g. bank statement)

You are required to submit these documents only upon request by IRAS.

34. Do training costs pertain only to local employees or all employees?

The qualifying training costs include training cost incurred for training of all employees i.e. both
local and foreign employees.

35. Do training costs incurred for overseas trainings or seminars qualify for PIC?

Yes, there is no restriction on where the training is conducted.

36. What are the allowable training costs for in-house training?

The qualifying training costs are:

- salary and other remuneration of in-house trainers for the delivery of the training courses
(i.e. based on the hours spent delivering the courses), excluding directors’ fees,
- rental of external training premises,
- meal and refreshments provided during the courses, and
- training materials and stationery.

Examples of expenditure that are not allowed include:

- salary and other remuneration paid to in-house trainers for their other duties, including time
spent in the preparation of course contents and training material,
- salary and other remuneration paid to employees who provide administrative support to the
training department,
- absentee payroll (i.e. salaries and other remuneration of any employee attending the
training courses),
- accommodation, travelling and transportation expenditure, and
- imputed overheads like rental and cost of utilities.

37. What are the allowable training costs for courses conducted by external training provider?

For external training courses, training fees paid to the external training provider qualify for the
enhanced deduction under PIC. This includes registration or enrollment fees, examination fees,
tuition fees and aptitude test fees. Rental expenses for external training premises, meal and
refreshments provided during the courses, training materials and stationery separately incurred
would also qualify for enhanced deduction under PIC.

However, expenses such as accommodation, travelling and transportation expenditure incurred

by the employees attending the course will not qualify for PIC.

Page 11 of 13
38. When computing the enhanced deduction on training expenditure, should the qualifying
expenditure incurred be net of Absentee Payroll funding?

No, there is no need to deduct the Absentee Payroll funding to arrive at the qualifying
expenditure for PIC. This is because the Absentee Payroll funding is given separately to help
employers defray the manpower costs incurred on employees attending training.

39. Are air fare and accommodation costs of the external trainer allowable for PIC?

Yes, expenses such as hotel accommodation, travelling (e.g. air fare) and transportation
expenditure incurred by your business for the external trainer will qualify for PIC.

40. The overseas course fees charged by the service provider included accommodation and airfare
for my staff attending but there is no breakdown for charges provided in the invoice. Can my
company claim the full amount of the billing under PIC?

No, staff accommodation and travelling do not qualify for enhanced deduction. If there is no
breakdown of the fees incurred, you may use the market rate for accommodation and airfare to
compute the disallowable amount.

41. For outsourced training, must the external trainer be a certified trainer?

There is no specific requirement for the external trainer to be a certified trainer.

42. My holding company conducts training for my employees. Is this considered in-house or
outsourced training and will the training expenses qualify for PIC?

Your holding company is considered an external training service provider. Qualifying training
expenses in relation to training of your employees will qualify for PIC.

43. If I need to send my employees for training to use a software that I have recently purchased,
will the training expenses incurred qualify for PIC?

The course fees paid to the external training service provider will qualify for the enhanced
deduction under PIC.

44. My employees have to take an examination after the course. Do they have to pass the
examination before I can claim PIC on the training expenses?

There is no requirement that the employees have to pass the examination after the course.

45. My employees have undergone an examination that required self-study but no training was
involved. Can my business claim PIC on the examination fees incurred?

From YA 2014 to YA 2018, examination fees with no training involved will qualify for PIC as long
as there is an element of self-study on the employees’ part and the fees were incurred for the
claimant’s trade or business.
Examination fees with no training involved and no element of self-study on the employees’ part
will not qualify for PIC (e.g. fees paid by employers for pure certification/evaluation of the skill
level of employees).

Page 12 of 13
46. Can training costs incurred by a sole-proprietor/partner qualify for PIC?

Training fees incurred by a sole-proprietor/partner do not qualify for tax deduction under the
PIC scheme as a sole proprietor/partner except for non-equity salaried partner*, is a business
owner and not an employee. Such expenditure, being personal and private in nature, is not
deductible as a business expense.

* A non-equity salaried partner who is under a contract of services is considered an employee.

47. We are a real estate agency company and we provide training to our agents who are not our
employees. Will the training costs that we incurred qualify for PIC?

From YA 2012 to YA 2018, qualifying training expenditure incurred on the following prescribed
classes of individuals engaged by the business to carry on its trade will qualify for PIC:

a) Salespersons registered under the Estate Agent Act;

b) Representatives within the meaning of the Financial Advisers Act;
c) Representatives within the meaning of the Securities and Futures Act; and
d) Insurance agents of insurers licensed under the Insurance Act.

48. Under a group centralised hiring system*, an employee (Mr X) who had a contract with the
group’s central hirer (Business A) was deployed to work solely for a related party, Business B.
Business B was then recharged with employment costs (including CPF contributions) by
Business A for Mr X. Business B provided training to Mr X for the purposes of its
trade/business. Can Mr X be treated as an employee of Business B, for which Business B can
make a claim for PIC on the training costs it incurred on Mr X?

From YA 2014 to YA 2018, individuals deployed under a centralised hiring arrangement will be
regarded as employees of the business where they are deployed, subject to the following
qualifying conditions:

a) The claimant (Business B) is able to produce supporting documents on the recharging of

employment costs by a related entity (Business A), in respect of employees working solely
in the claimant entity;
b) The corporate structure and centralised hiring practices are adopted for bona fide
commercial reasons; and
c) The related entity (Business A) does not claim deductions on the training expenses
recharged to the claimant entity (Business B).

If the above qualifying conditions are met, Mr X can be treated as an employee of Business B and
the qualifying training costs incurred by Business B on Mr X will qualify for PIC.

* Some examples of centralised hiring arrangements include deployments where the HR

function of a group of companies is centralised in a single entity, with the staff costs (including
training expenditure) allocated to the respective entities, or a secondment, where employees
are seconded to work for a related company. Once seconded, the staff costs are fully recharged
to the related company.

Page 13 of 13