Existing law – The expiry of the Productivity & Innovation Credit (PIC) scheme after YA 2018 (ie. the calendar year 2017) will mean that only 100% tax deduction will be allowable to a company who has incurred qualifying intellectual property (IP) licensing expenditure from YA 2019.

Interpretation

For every qualifying $1 spent in the financial year ended 2017 would either qualify for a cash payout or further deduction of $3 under the PIC scheme. Total $4 deduction against profit/loss.

For every qualifying $1 spent in the financial year ended 2018 (YA2019), the same $1 qualifies for deduction against profit/loss.

New under Budget 2018 – “To support businesses to buy and use new solutions, the Minister for Finance announced in Budget 2018 that the tax deduction will be enhanced from 100% to 200% on up to $100,000 of qualifying IP licensing expenditure incurred by a company for each YA from YA 2019 to 2025. 100% tax deduction will continue to be allowed on qualifying IP licensing expenditure incurred in excess of $100,000 for each YA.”

Interpretation

For every qualifying $1 spent in the financial year ended 2018 till 2024 (YA2019 to YA2025), you would qualify for a further deduction of $1 under the PIC scheme. Total $2 deduction against profit/loss.