Welcome to our Singapore Budget 2014 summary.
The following is the Budget 2014 Summary were announced by Minister for Finance, Mr. Tharman Shanmugaratnam in his Budget Statement for the Financial Year 2014 which was delivered in Parliament on Friday, 21 February 2014.
Extension and Enhancement to the Productivity and Innovation Credit (PIC) Scheme ($3.6 billion over three Years of Assessment (YAs))
PIC Extension. The PIC Scheme, which lapses after YA2015, will be extended for three years (i.e. YA2016 to YA2018) at the current support level. The expenditure cap for each qualifying activity is combined across the three years, which means businesses can claim enhanced tax deductions of up to $1.2 million ($400,000 x 3 YAs).
PIC+ scheme. To help firms that are making substantial investments to revamp their businesses, we will raise the expenditure cap for each of the six qualifying activities from the current $400,000 to $600,000 with effect from YA2015. This means that qualifying SMEs that have hit the combined cap of $1.2 million (across three YAs) can now claim enhanced tax deductions of up to $1.8 million in qualifying expenditure.
To reinforce the condition that the payouts are made to businesses with active business operations, businesses will have to meet the three-local-employees condition for a consecutive period of at least three months prior to claiming the cash payout. This requirement will take effect for PIC cash payout applications from YA2016.
Extension of Research & Development (R&D) Tax Deductions Scheme
To continue encouraging R&D in Singapore, the broad-based 50% additional tax deduction on qualifying R&D expenditure, which lapses after YA2015, will be extended for 10 years till YA2025. The further tax deduction for EDB-approved R&D activities, which lapses after 31 March 2015, will also be extended till 31 March 2020.
Extension of Writing Down Allowance Scheme for Intellectual Property Rights
As part of our ongoing efforts to build Singapore as an IP hub, the Writing Down Allowance Scheme for Intellectual Property Rights, which lapses after YA2015, will be extended for five years till YA2020.
Extension and Enhancement of the Land Intensification Allowance (LIA) Scheme
To continue encouraging businesses to optimise land use, the LIA Scheme, due to expire next year, will be extended for five years till 30 June 2020. The LIA will also be extended to the logistics sector, as well as to businesses carrying out qualifying activities on airport and port land.
Waiving the Withholding Tax Requirement for Payments made to Branches in Singapore
To reduce compliance costs for businesses, payers will no longer need to withhold tax on sections 12(6) and 12(7) payments made to PEs that are Singapore branches of non-resident companies.
These branches in Singapore will continue to be assessed for income tax on such payments that they receive and will be required to declare such payments in their annual tax returns. This change will take effect for all payment obligations that arise on or after 21 February 2014.
Enhancing the Parent and Handicapped Parent Reliefs
To provide greater encouragement and recognition to individuals supporting their or their spouse’s parents, the quantum of parent / handicapped parent relief will be increased, with individuals who are staying with these dependants enjoying a higher relief quantum. for detail, please refer to TAX CHANGES
Enhancing the Handicapped Spouse, Handicapped Sibling and Handicapped Child Reliefs
To provide greater recognition to individuals who are supporting their handicapped dependants, the amount of handicapped spouse, handicapped sibling and handicapped child reliefs will be increased with effect from YA2015. For detail, please see http://www.singaporebudget.gov.sg/data/budget_2014/download/annexa5.pdf
Removing Transfers of Qualifying Deductions, and Deficits Between Spouses
To simplify the personal income tax system, married couples can no longer transfer qualifying deductions and deficits between each other (including under the loss carry-back scheme) with effect from YA2016.
3-Year Transition Support Package
In Budget 2013, we introduced the 3-Year Transition Support Package that will remain in effect until YA 2015, comprising:
(i) Wage Credit Scheme (WCS);
(ii) Productivity and Innovation Credit (PIC) Bonus; and
(iii) Corporate Income Tax (CIT) Rebate
For detail, please see Singapore Budget 2013
Capability Development Grant (CDG)
SPRING will assess the application based on the SME’s needs, the project scope and competency of the service provider to improve the SME’s business capabilities.
The 10 supportable areas are:
(i) Brand Development;
(ii) Business Innovation and Design;
(iii) Business Strategy Development;
(iv) Enhancing Quality and Standards;
(v) Financial Management;
(vi) Human Capital Development;
(vii) Intellectual Property and Franchising;
(viii) Productivity Improvement;
(ix) Service Excellence; and
(x) Technology Innovation
For more details, please visit the SPRING website: Spring Singapore.
Innovation and Capability Voucher (ICV)
The ICV is a $5,000 voucher that allows SMEs to upgrade their capabilities in four areas:
(iii) Human Resource Development; and
(iv) Financial Management
SMEs may apply for two vouchers per area of supported services at service providers participating in the ICV scheme. From 1 March 2014 onwards, SMEs can also use the vouchers to implement and procure solutions in the 4 areas. Each ICV project must be completed before a new application will be considered. The duration for each project should not exceed six months.
For more details, please visit the SPRING website: Spring Singapore.
Inclusive Growth Programme (IGP)
The IGP encourages businesses to become more productive and share gains with workers. IGP co-funds projects that:
(i) Improve business productivity using measurable indicators; and
(ii) Improve the value of lower-wage jobs and raise the wages of lower-wage workers (earning $1,700 or less per month)
Eligible projects include:
(i) Automation and mechanisation (e.g. purchase of equipment);
(ii) Process re-engineering;
(iii) Adopting Best Sourcing Initiative standards;
(iv) Training programmes; and
(v) Job redesign.
The IGP provides up to 50% co-funding for productivity projects. This is capped at $150,000 per project and $500,000 per company per year.
Please visit the e2i website Want to improve your business operations? for more information. You can also contact e2i at IGP@e2i.com.sg.
ICT for Productivity and Growth (IPG) Programme ($500 million over three years)
To accelerate the adoption of ICT solutions among SMEs, IDA will, over the next three years:
– Promote the adoption of proven ICT-based productivity solutions by subsidising 70% of the qualifying costs, and reimbursing the vendors directly so that SMEs need not apply for the subsidy.
– Encourage SMEs to pilot emerging technology solutions, by funding 80% of the qualifying costs, up to a maximum of $1 million subsidy per firm.
– Provide SMEs that tap on qualifying ICT-based productivity solutions with a 50% subsidy on their fibre subscription plans of at least 100Mbps for up to two years, capped at $120 per month.
– Support SMEs to implement Wireless@SG services at their premises by providing a one-time subsidy of up to $2,400 for them to set up the necessary equipment.
– Overcome installation challenges and ensure that more non-residential buildings have the facilities to bring fibre broadband to their business tenants, by subsidising building owners for up to 80% of the costs of new in-building infrastructure, up to a maximum of $200,000 per qualifying building.
PIONEER GENERATION PACKAGE
The Pioneer Generation Package honours and recognises the Pioneer Generation for their significant contributions in the early days of our nation-building. The ‘Pioneer Generation’ is defined as living Singaporeans who meet 2 criteria:
i. Aged 16 and above in 1965 (born on or before 31 Dec 1949, which also means they are aged 65 and above in 2014); and
ii. Obtained citizenship on or before 31 Dec 1986.
Through this package, government want to provide the Pioneer Generation with greater assurance so that they do not have to worry about their healthcare costs in their old age. The package detail, please refer to Pioneer Generation Package
Increase in CPF Contribution Rate
Employer contribution rates to the Medisave Account (MA) will be increased by 1 percentage point to help workers save for their future healthcare expenses.
MA contribution rates will also be raised by 1 percentage point for self-employed persons with annual net trade income1 of $18,000 and above, to align with the increase for employees.
Both increases will take effect from 1 January 2015.
The CPF contribution rates for workers aged above 50 years to 65 years will be increased from 1 January 2015.
New CPF Contribution Rates for All Workers
For the detail, please refer to CPF contribution rate changes rate changes and related assistance measures for employers.
Related Assistance Measures for Employers
Enhancement of the Special Employment Credit (SEC)
To help employers adjust, the SEC will be enhanced for one year to provide employers who hire Singaporean workers aged above 50 earning up to $4,000 month with an additional offset of up to 0.5 percent of wages.
With the enhancement, employers who hire older Singaporean workers between 1 January 2015 and 31 December 2015 will receive an SEC of up to 8.5 percent of a worker’s monthly wage. For more information on the SEC, please refer to Special Employment Credit (SEC) – www.sec.gov.sg.
Temporary Employment Credit (TEC)
To alleviate the rise in business costs due to the increase in Medisave contribution rates, employers will receive a one-year offset of 0.5 percent of wages for Singaporean and Permanent Resident workers up to the CPF salary ceiling of $5,000 per month.
TEC payments will be made based on employees’ incomes paid in 2015. More details will be made available at a later date.
Special transfers to households
Service and Conservancy Charges (S&CC) Rebates
The S&CC rebates cost $80 million and will benefit about 800,000 households.
GST Voucher (GSTV) – U-Save Special Payment.
The GSTV – U-Save Special Payment will be paid out on top of the regular GSTV – U-Save payments.
It costs $110 million and will benefit about 800,000 households.
GSTV – Cash: Seniors’ Bonus
Eligible older Singaporeans aged 55 and above in 2014 will receive a one-off GSTV – Cash: Seniors’ Bonus. This will be paid out on top of their regular GSTV – Cash, so they will get double the amount of GSTV – Cash this year.
It costs $170 million and will benefit about 675,000 older Singaporeans.
For more details, please refer to Singapore Budget 2014.