Issue 1, Quote 1, Week 4, May 2014
So stop daydreaming and wasting time, start changing the world!
Friday, May 30, 2014
Wednesday, May 28, 2014
What is Productivity Innovation Credit PIC? Where can you get free consultation? Why you should not abuse it!
Issue 1, Article 2, Week 4, May 2014
Productivity Innovation Credit
Singapore has no lack of resources and support when it comes to helping entrepreneurs on cash-flow for businesses. Apart from SPRING, the most popular funding support that most SME goes for in recent times will be productivity innovation credit, commonly known as PIC.
I had a chat with a friend yesterday on the reasons for PIC and why we should not abuse it. My friend was sharing with me how his friend paid $1500 and got back $8000 for a website and a free lap top. My first reaction was, is it legit? It certainly does not sound so!
WHAT IS PIC?
PIC supports investment in innovation and productivity (like what the name suggests). Businesses can enjoy tax savings or cash payout if they engage in any of the 6 activities below:
- Acquisition and leasing of PIC Information Technology (IT) and Automation Equipment;
- Training of employees;
- Acquisition and In-licensing of Intellectual Property Rights;
- Registration of patents, trademarks, designs and plant varieties;
- Research and development activities;
- Design projects approved by Design Singapore Council.
HOW DOES PIC WORKS?
If your company chooses the tax deduction option (generally companies choose this option when they have high profit / higher expenditure to claim and would like to offset against their profit for tax savings), your company will enjoy 400% Tax Deductions on up to $400,000 of expenditure per year. However, if your company chooses PIC Cash Payout, your company can enjoy cash payout on up to $100,000 of expenditure per year.
Let us take a very simple example of a single PIC claim in YA 2014. Supposed you decided to buy devices such as smart phones, tablets, lap tops, machines etc that cost you $15,000.
You will get a cash payout of 60% * 15,000. On top of that, you will get a PIC bonus of $15,000. Note that the maximum cumulative PIC bonus that you can claim over the years is $15,000. As such, you will get back $24,000. That is:
1. Cash payout: 60% * 15,000 = $9000
2. PC Bonus: $15,000 (Cap at $15,000)
Total amount that your company will get back: $15,000 + $9000 = $24,000
Suppose you decided to give a training that cost you $10,000 in 2015, you will be able to claim back 60% of $10,000 and you will not be entitled to any PIC bonus since you have already gotten the maximum amount of $15,000 PIC bonus in 2014.
Another thing to note is that you will only be entitled to PIC bonus if your claim exceed $5,000. That is, if your first time claim is $4,000, you will get 60% of $4,000 and $0 for PIC bonus since your claim did not exceed $5,000.
If you need help in your PIC claim, there is NO NEED to hire an external consultant that charges you $2,000 or $3,000 consultation fees as the ASME consultant helps you for free! I have far too many friends who paid for the consultation fees and got pissed when they realised that ASME consultant helps for free. If you need ASME consultant's contact, please contact me via the contact form at the right hand side.
Having said that, what I told my friend is: you need to know what the company is doing. What kind of website? If it does not includes system that improves productivity, it is not claimable. Most importantly, in order to claim for PIC, you will need to pay for the full amount of the website first and subsequently claim it back through PIC. I am skeptical of the company that allows you to pay $1500 and get back $8000 and a free lap top!
WHY YOU SHOULD NOT EXPLOIT PIC?
It is a very simple theory. A lot of the people exploited and misappropriated the good intention of the government to help businesses in Singapore. If a company does a fake claim and is caught (you should know the heavy consequences when you do something like that in Singapore --> http://www.iras.gov.sg/irasHome/page04.aspx?id=15532). Most importantly, if the government realised that PIC is not improving the productivity and companies are faking the claim, the government will scrap off PIC and so companies who truly need the fund to improve productivity and innovate are now deprived of this chance! (Sounds like Lemon Problem, isn't it?)
I strongly urged companies in Singapore to use PIC wisely so that in years to come, we can still claim 60% of our productivity or innovative activities.
Share with me your views!
Why did I set up this blog?
Doing business requires a lot of learning and sharing from entrepreneurs. I feel that I learnt the most while talking to fellow entrepreneurs. As time passed by, I realised that it is imperative that I jot down what I have learnt or quotes that I think of so that it will become a knowledge platform where people can participate in my thought process and makes my learning journey even more complete.
About Valerie Chai
I am the founder of starCresto Education Group (starCresto).
starCresto was founded in year 2000 and has expanded over the years from tuition to tuition agency to enrichment courses to mentoring. I am born in a poor family and I guess that gave me a lot of drive to succeed and get out of poverty cycle and most importantly, the rat race that so many people are stuck in. I believe strongly in human capital and talent management.
1. Think strategically
2. Behave optimistically
3. Execute courageously
Share with me your experience as well!
Tuesday, May 27, 2014
The key questions to ask yourself when you are setting up a business - Entrepreneur Weekly
Issue 1, Article 1, Week 4, May 2014"The WHAT, WHO, HOW, WHY, WHERE questions"
Before you start your business, while in your business, I always find it useful to ask the following questions:- What business are you in?
- What products and /or services are you offering?
- What is your positioning?
- Where do you see your business in 3, 5 10 years time and beyond?
- Who is your target audience?
- Why would people buy from you and not your competitors?
- (What is your unique selling points? How are different from your competitor?)
- How are you going to reach out to your key audience?
- How are you going to execute your business plans?
- How do you convince people to buy your products or use your service?
- When are your milestones? (Set clear goals and lay out plans to achieve them)
Why did I set up this blog?
Doing business requires a lot of learning and sharing from entrepreneurs. I feel that I learnt the most while talking to fellow entrepreneurs. As time passed by, I realised that it is imperative that I jot down what I have learnt or quotes that I think of so that it will become a knowledge platform where people can participate in my thought process and makes my learning journey even more complete.
About Valerie Chai
I am the founder of starCresto Education Group (starCresto).
starCresto was founded in year 2000 and has expanded over the years from tuition to tuition agency to enrichment courses to mentoring. I am born in a poor family and I guess that gave me a lot of drive to succeed and get out of poverty cycle and most importantly, the rat race that so many people are stuck in. I believe strongly in human capital and talent management.
The business journey has not been all that smooth sailing with great lessons learnt from mistakes made. With all these learning, I live by my three rules in life now:
1. Think strategically
2. Behave optimistically
3. Execute courageously
Share with me your experience as well!
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