5 Things You Need to Know Before Filing For PIC

filing for grants
Asian businesswoman calculating pile of bills in the office

You might have heard but there was a delay in the PIC claims for end of 2014 and many people actually have their claims rejected.

What is PIC?

PIC, which stands for productivity and innovation credit is a scheme to incentivise SMEs to become more efficient by upgrading their capabilities. However, as it has a cash component of up to $60k, it’s been subject to much abuse and the government chose end of 2014 to clamp down hard.

Many SMEs have had their claims rejected due to conditions that were not listed anywhere in the official PIC documents or not well explained, which is quite unfair as PIC was supposed to be a simple DIY claim system. It just puts the power in the hands of PIC consultants which take anywhere from 20% to 40% of the payout.

If you still want to do it yourself, here are 5 things you need to know

1. Be Diligent and Split Up Your Claims Over The Quarters

You have to be very diligent in keeping all your invoices and receipts as they may ask for it during the claiming process. Since it works on a quarterly filing system, try to split up your expenses over time and file every quarter if you can. That will spread out the risk of any one quarter that drags the whole process down or in the event of an investigation like Q4 2014 where the entire year’s claims get rejected.

2. Split Up Equipment Claims and Service Claims

Equipment claims like computers and tablets are generally quite straightforward and easier to claim as opposed to services. There are many reasons for them to reject service claims and sometimes it depends on how you justify as well as the person handling it, so it’s generally better to put those are easier to claim together in one quarter and those that are more subjective in another.

3. Outsource to 3rd Party Vendor Instead of DIY

Although this seems contrary to how a startup should operate, PIC officers do not seem to like reimbursing technology development costs for in-house labour work. They seem to think that the companies are trying to game the system. So if you have a project to be done, outsource the one you intend to claim for PIC. As for vendors, it is best if they are not related in anyway, i.e. same director or shareholder, there are stories of claims getting rejected as the vendor’s shareholder is also a minority shareholder in the SME.

4. Your Business Must Be in Operation

What does that mean? It means that you have to be generating revenue of some form which is according to what you described in your business. A company that doesn’t have any revenue will stand out like a sore thumb to the PIC officers, they will think “did these guys setup the company just to get PIC money”? That’s because there are tons of illegitimate businesses built around the PIC and you want to avoid looking like one of them. Make sure you have revenue in the company in that year you are filing and make sure it’s relevant revenue, so if your business is described as “Building a B2B platform for Companies” then advertising revenue may not be a relevant revenue for them.

5. Definition of Local Employees

This is generally the toughest condition to fulfil as you actually need to hire people and pay them CPF. The conditions have just gotten stricter and again they seem to be clamping down on people that try to use part time employees to fulfil this criteria. Using “phantom” employees like family members who are actually not involved in the business is seen as a abuse of the scheme. So be sure to do it correctly and not just listen to any PIC consultant as ultimately the responsibility still falls on you, the person claiming.

Do you know anything else that people should be aware of when claiming PIC? Feel free to share and comment!

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