Ernst & Young adds to calls for extension of PIC scheme in Budget 2014

Another tax specialist has suggested that the Productivity and Innovation Credit (PIC) scheme should be extended and refined in the upcoming Budget.

In its wishlist for this year's Budget, Ernst & Young called for the scheme - set to expire when the Government's 2014 financial year ends in March 2015 - to be extended for a further five years.

"Efforts to encourage productivity and innovation will be short-lived if the PIC is phased out, especially when investments in productivity are just beginning to take off," said Ms Tan Bin Eng, Business Incentives Advisory partner at Ernst & Young.

The PIC, which has been enhanced each year since it was introduced in 2010, allows businesses to deduct from their taxable income 400 per cent of the first $400,000 spent on productivity-related investments.

Besides an extension of the scheme, there is also room for a more generous payout, said the audit firm.

The PIC allows eligible companies to convert up to $100,000 of qualifying PIC expenditure into a cash payout.

Increasing the cash payout from $100,000 to $400,000 for companies with less than $100 million in turnover will ensure that the benefits reach a more targeted group, said Ms Tan.

Ernst & Young's proposal to extend the scheme comes on top of similar suggestions by other accounting firms including Deloitte Singapore and PricewaterhouseCoopers.