Expenditure incurred on the purchase of fixed assets is not deductible for tax purposes as it is capital in nature. Instead, capital allowances can be claimed as a deduction based on tax prescribed rates against the adjusted profit.
Companies can claim Productivity and Innovation Credit (PIC) enhanced allowances at 300% of the cost of qualifying IT and Automation equipment. The PIC Scheme has been extended up to YA 2018.
The expenditure Cap is S$400,000 per YA and the combined expenditure Cap will be S$1.2 million for the YA’s 2016 to 2018. The combined expenditure cap for qualifying SME’s will be S$1.8 million for YA’s 2016 to 2018.
A company may apply for investment allowance in respect of fixed capital expenditure for approved projects. Under the investment allowance scheme, a company is granted an investment allowance in addition to the capital allowances based on an approved percentage of the fixed capital expenditure incurred on plant, machinery and factory building for an approved project.