SINGAPORE BUDGET 2014- A Snapshot
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MANAGEMENT SERVICES PTE. LTD.
Company Registration No. 200600763K
SINGAPORE BUDGET 2014 –
A SnapshotMANAGEMENT SERVICES PTE. LTD.
Company Registration No. 200600763K
Foreword
On 22 February 2014, Finance Minister Mr. Tharman Shanmugaratnam has announced his
budget statement for the Financial Year 2014 which was delivered in Parliament.
Foreign labour supply will remained tightened and our economy needs to move forward by
increasing our productivity.
The Government has extended their support towards business restructuring by extending
the PIC tax deductions and PIC cash payout from the Year of Assessment 2015 to the Year
of Assessment 2018. The PIC tax deductions scheme was further tweaked with more tax
deductions for Small and Medium Enterprises. This allows business in the midst of
restructuring their business more certainty and cash flow support for the next 3 to 4 years.
Another key component of the budget will be the simplification of the iSPRINT Grant
application process. The Government had stepped forward in their efforts to encourage
business in Singapore to make use of technology and IT solutions by paying 70% of the cost
of IT solutions directly to the vendors. Compared to the grant application process, this greatly
reduces the initial cash outlay required by business who are required to make the full
payment first and then subsequently reimbursed by Infocomm Development Authority Of
Singapore (IDA).
With all the changes that have taken place, we have gathered and summarised the following
points which we had deemed to be more relevant to companies to assist them in
understanding the recent changes and initiatives as shown below:
1. Extension of Productivity and Innovation Credit Scheme
2. Introduction of “PIC+” Scheme
3. Training of Individuals under Centralised Hiring Arrangement
4. Enhancement of Personal Tax Reliefs
5. Revision of CPF Contribution rates
6. Enhancement of Micro-Loan Programme
7. Infocomm Technologies (ICT) for Productivity and Growth (IPG) Programme
All relevant changes have been taken into consideration and summarised into this Snapshot
for your reference.MANAGEMENT SERVICES PTE. LTD.
Company Registration No. 200600763K
Contents
Corporate Tax
1. Extension of Productivity and Innovation Credit Scheme
2. “PIC+” Scheme
Personal Tax
3. Increase in Personal Tax reliefs
4. Cessation for Transfer of qualifying deductions between spouses
CPF
5. Increase in CPF Contribution Rates
Others
6. Enhancement of Special Employment Credit
7. Introduction of Temporary Employment Credit
8. Enhancement of Micro-Loan Programme
9. Infocomm Technologies (ICT) for Productivity and Growth (IPG) ProgrammeMANAGEMENT SERVICES PTE. LTD. Company Registration No. 200600763K Extension of Productivity and Innovation Credit Scheme The existing Productivity and Innovation Credit (PIC) Scheme which is due to expire in the Year of Assessment (YA) 2015 will be extended until YA 2018. The PIC Cash Payout will still be capped at a total expenditure of $100,000. However, there are some changes to the qualifying conditions for claiming the Cash Payout under the PIC Scheme. From YA 2016 onwards, businesses will have contribute CPF for at least 3 local employees* for 3 months consecutively prior to claiming the Cash Payout. From YA 2014 onwards, training expenses pertaining to individuals hired under Centralised Hiring Arrangements will qualify for the PIC Scheme. The tax deferral option will also cease with effect from YA 2015. *Business Owners, Partners and Shareholders who are Directors of the companies are not included as employees to qualify for PIC Cash Payout. 1|Page
MANAGEMENT SERVICES PTE. LTD. Company Registration No. 200600763K “PIC+” Scheme To further help SMEs* that are making more significant investments to increase their productivity, a new “PIC+” Scheme will be introduced from the YA 2015. Under the new “PIC+” Scheme, the expenditure cap for each qualifying activity will be increased to $600,000, with a combined cap of $1.8 million from YA 2016 to YA 2018. With the “PIC+” Scheme, the expenditure cap for YA 2015 will also be increased from $400,000 to $600,000 per qualifying activity. *SMEs are businesses and companies with an annual turnover of less than $10 million and has not more than 200 employees at group level (where applicable) 2|Page
MANAGEMENT SERVICES PTE. LTD.
Company Registration No. 200600763K
Increase in Personal Tax Reliefs
In recognition to individuals who are supporting their parents and grandparents, there will be
an increase in Parent Relief and Handicapped Parent Relief.
The new relief amounts are as follows:
Amount of Relief with effect from YA 2015
Staying with dependant Not staying with dependant
Parent Relief $9,000 $5,500
Handicapped Parent Relief $14,000 $10,000
With effect from YA 2015 onwards, parent / handicapped parent relief can be shared among
claimants at their agreed proportion.
At the same time, individuals who are supporting their handicapped spouse, siblings or
children will also enjoy an increased relief in their Personal Tax.
The new relief amounts are as follows:
Amount of Relief with effect from YA 2015
Handicapped Spouse Relief $5,500
Handicapped Sibling Relief $5,500
Handicapped Child Relief $7,500
3|PageMANAGEMENT SERVICES PTE. LTD. Company Registration No. 200600763K Cessation for Transfer of qualifying deductions between spouses With effect from YA 2016, an individual will no longer be able to transfer any qualify deductions or deficits to his or her spouse. However, qualifying deductions and deficits that are incurred in and before YA 2015 will still be allowed for transfers up till YA 2017. 4|Page
MANAGEMENT SERVICES PTE. LTD.
Company Registration No. 200600763K
Increase in CPF Contributions Rates
With effect from 1 January 2015, the CPF Contribution Rates for employees that are earning
at least $1,500 per month will be revised as follows:
Contribution Rate (% of wage)
Employee Age
(Years) Contribution by Contribution by
Total
Employer Employee
35 and below 17 20 37
Above 35 to 45 17 20 37
Above 45 to 50 17 20 37
Above 50 to 55 16 19 35
Above 55 to 60 12 13 25
Above 60 to 65 8.5 7.5 16
Above 65 7.5 5 12.5
5|PageMANAGEMENT SERVICES PTE. LTD. Company Registration No. 200600763K Enhancement of Special Employment Credit In view of the increase in CPF Contribution for older workers, employers who employ Singaporean workers who are aged above 50 and earning up to $4,000 a month between 1 January 2015 and 31 December 2015 will receive a Special Employment Credit of up to 8.5% of a worker’s monthly salary. 6|Page
MANAGEMENT SERVICES PTE. LTD. Company Registration No. 200600763K Introduction of Temporary Employment Credit As a measure to assist employers in adjusting to the increase in Medisave contribution rates, a Temporary Employment Credit (TEC) Scheme has been introduced to take effect from January 2015 for a period of one year. Under the TEC, employers will receive an offset of 0.5% of salaries paid to Singaporeans and Permanent Residents up to the CPF salary ceiling of $5,000 per month based on the salaries paid in 2015. 7|Page
MANAGEMENT SERVICES PTE. LTD.
Company Registration No. 200600763K
Enhancement of the Mirco-Loan Programme
The Micro-Loan Programme introduced in 2001 will be further enhanced to encourage banks
to extend more small loans below $100,000 to the young SMEs. SPRING Singapore will
increase the government’s risk share in the Micro-Loan Programme for young SMEs to 70%.
To qualify for the Micro-Loan Programme, you must be:
- Incorporated in Singapore
- Has 10 or fewer employees OR has annual sales not exceeding $1 million
- Has at least 30% local shareholding; and
- Company’s Group Annual Sales of not more than $100 million OR company’s Group
employment size of not more than 200
8|PageMANAGEMENT SERVICES PTE. LTD.
Company Registration No. 200600763K
Infocomm Technologies (ICT) for Productivity and Growth (IPG)
Programme
Many larger corporations have been actively adopting ICT solutions over the past few years.
In order to encourage more SMEs to adopt ICT solutions, an ICT for Productivity and Growth
(IPG) programme will be introduced.
The programme consists of the following:
Initiative 1: Scaling up proven ICT solutions
SMEs who adopt proven ICT solutions will enjoy a subsidy of 70% of the qualifying cost* when
they engage qualified vendors for the solution they need. Above that, SMEs will not need to
apply to IDA for the subsidy, but instead IDA will reimburse the vendors directly.
However, only sectoral solutions that are helpful to SMEs in achieving productivity gains and
are supported under iSPRINT are eligible under the programme.
iSPRINT covers the following costs:
Qualifying Cost Grant Amount
- Software Subscription
OR
BASIC 70% of qualifying cost,
Pay-per-use costs
Packaged Solutions - capped at $2,000
Consultancy costs
- Training costs
- Software Subscription
OR
INTERMEDIATE Pay-per-use costs 70% of qualifying cost,
Packaged Solutions - Consultancy costs capped at $20,000
- Training costs
To qualify for iSPRINT, SMEs must meet the following criterias:
- Must be a local SME
- Must have at least 30% local shareholding
- Company’s Group Annual Sales of not more than $100 million OR company’s Group
employment size of not more than 200
- Must not already own or using any other solutions that you are adopting
For the latest list of Basic/Intermediate/SaaS iSPRINT Packaged Solutions, click here.
9|PageMANAGEMENT SERVICES PTE. LTD.
Company Registration No. 200600763K
Infocomm Technologies (ICT) for Productivity and Growth (IPG)
Programme (continued)
Initiative 2: Piloting of emerging solutions
SMEs who decides to adopt ICT transformative solutions that is currently not used by
Singapore SMEs will enjoy a subsidy of 80% of the qualifying cost, up to $1 million per SME.
Interested SMEs can approach the respective vendors, who will apply for the subsidy to IDA
and upon completion of the project, IDA will reimburse the vendors directly.
Initiative 3: Enabling high-speed connectivity for businesses
With the introduction of fibre plans, SMEs who subscribe to fibre subscription plans of at least
100 Mbps will enjoy a subsidy of 50% of the monthly recurrent cost of the plan. This is however
capped at $120 per month up to 24 months OR $2,880 per SME.
Moreover, SMEs who decides to implement Wireless@SG services at their premises will enjoy
a subsidy, capped at $2,400 when acquiring the Wireless@SG equipment. This is however
subjected to the condition that SMEs must extend the wireless hotspots to the general public.
To qualify for the above subsidies in Initiative 3, SMEs must still meet the following criterias:
- SME must not already have subscribed to the fibre subscription plan
- SME must qualify for iSPRINT support for the adoption of an ICT-based solution that
can transform or grow their business (excluding firms with support of less than $2,000
for off-the-shelf iSPRINT solutions)
10 | P a g eMANAGEMENT SERVICES PTE. LTD. Company Registration No. 200600763K For more information or comments, please contact us: Vodich Management Services Pte. Ltd. 151 Chin Swee Road #07-12 Manhattan House Singapore 169876 Email: sales@vodich.com.sg Email: dongneng@vodich.com.sg Tel No: 6733 9196 Fax No: 6733 9096 These notes are designed to keep clients up to date with tax developments and do not constitute professional advice. They are of a general nature only and are not intended to be comprehensive. Readers are therefore advised that before acting on any matter arising from these notes, they should discuss their particular situation with the Company. No liability can be accepted for any action taken as result of reading the notes without prior consultation with regard to all relevant factors. Please note that the Budget proposals and other tax changes summarised in this document may be amended significantly before enactment. 11 | P a g e
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