INLAND REVENUE
AUTHORITY
OF SINGAPORE
COURSE MATERIAL GST General Guide for
Traders How do I keep Records
and Accounts How do I prepare my
GST Return? Lecture Notes on GST
Class GST Class Feedback
Form Slip on IRAS Homepage
Q&A question slip
CONTENTS Overview Of GST System How GST works Concepts Of GST Scope Of Tax Exports Tax Invoice Purchases Obligations GST F5 & F7
CONTENTS
Common Misconceptions Application Exercise Penalties & Recovery Actions Q & A session Feedback
OVERVIEW OF GST SYSTEM
What is GST?- tax on domestic consumption- paid whenever customers buy goods
or services from GST registered businesses
- charged and accounted for at a rate of 7% (with effect from 1 July 2007)
OVERVIEW OF GST SYSTEM Are All Goods And Services Taxable?
- All Goods and Services within the GST System
are taxable except those which have been
specifically exempted by the Act
- Main exempt items are financial services and
the sale or lease of residential properties
OVERVIEW OF GST SYSTEM Who Collects GST?
- For supply of goods or services in Singapore, GST is collected by traders like you who have registered with the Comptroller of GST
- For importation of goods, GST is collected by the Singapore Customs at the point of importation
HOW GST WORKS
Basic GST Process (Output Tax)
GST collected
from customers
HOW GST WORKS
Basic GST Process (Output Tax) (Input Tax)
GST collected less GST paid on
from customers business purchases
HOW GST WORKS
Basic GST Process (Output Tax) (Input Tax)
GST collected less GST paid on
from customers business purchases
equals
Net GST
Basic GST Process Net GST
+ -
Payable to Refundable from
Comptroller Comptroller
HOW GST WORKS
HOW GST WORKSSELLING PRICE GST Payable
Import Value = $ 5,000 GST paid on import = $350
Manufacturer’s Price = $10,000 Manufacturer GST Collected = $700GST Amount = $ 700 Less: GST Paid = $350Selling Price = $10,700 GST Payable = $350
Retailer’s Price = $20,000 GST Collected = $1,400GST Amount = $ 1,400 Retailer Less: GST Paid = $ 700Selling Price = $21,400 GST Payable = $ 700
Consumer pays = $21,400 Total GST Paid = $1,400 Consumer
CONCEPTS OF GST
1. Scope of Tax
2. Types of Supply
3. When Should You Account for GST?
4. What Is the Value of Supply That Is Subject to GST?
Section 8 of GST ActGST will be charged on any supply of goods or services if it is :i) made in Singaporeii) a taxable supplyiii) made by taxable personiv) in the course or furtherance of business
SCOPE OF TAXSCOPE OF TAX
SCOPE OF TAX
Supply includes all forms of supply done for a consideration.
Forms of supply can be either goods or services
MADE IN SINGAPORE?
PLACE OF SUPPLY
Goods are supplied in Singapore if goods are in Singapore or from Singapore
Services are supplied in Singapore if supplier belongs in Singapore
SCOPE OF TAX
SCOPE OF TAX
TAXABLE SUPPLY
- A supply of goods or services made in
Singapore other than an exempt
supply
- Consist of standard-rated and zero-
rated supplies
SCOPE OF TAX
Taxable Person
- A person that is GST-registered or
is required to be registered for GST
under the Act
Non-Taxable
Taxable
TYPES OF SUPPLY
Out-of-Scope
Exempt
Non-Taxable
Taxable
Out-of-Scope
Exempt
Zero-rated (0%)
Standard-rated (7%)
TYPES OF SUPPLY
Out -of-scope Supply Private Transactions Third Country Sales
(Sales outside Singapore)Exempt Supply Sale and Lease of Residential
Properties Financial Services
NON-TAXABLE SUPPLY
Goods are shipped from China to U.S.A.
without coming into S’pore
Supply is out-of-scope
Zero-rated Supply (0% GST) Export of Goods International Services
Standard-rated Supply (7% GST) All Others Eg: Sale of Fixed Assets
TAXABLE SUPPLY
TAXABLE SUPPLY
SALE OF FIXED ASSETS GST must be charged on the sale of Fixed
AssetsEg : Non residential properties, furniture, computers,
etc
GST to be accounted on Selling
Price of Asset
TAXABLE SUPPLY
GST is a transaction based tax Need to review all transactions
including those not in the normal course of business
Taxable supply
Made by taxable person
In course or furtherance of business
GST
A GST registered art dealer buys painting in London and sells it to customer in Japan
X
NO
Taxable supply
Made by taxable person
In course or furtherance of business
GST
A GST registered art dealer buys painting in London and sells it to customer in Japan
X
NO
A GST registered art dealer sells his personal piano
X
NO
Taxable supply
Made by taxable person
In course or furtherance of business
GST
A GST registered art dealer buys painting in London and sells it to customer in Japan
X
NO
A GST registered art dealer sells his personal piano X
NO
A residential property developer who develops and sells executive condominiums
X X
NO
Taxable supply
Made by taxable person
In course or furtherance of business
GST
A GST registered art dealer buys painting in London and sells it to customer in Japan X
NO
A GST registered art dealer sells his personal piano
X
NO
A residential property developer who develops and sells executive condominiums
X X
NO
A GST registered developer of both residential and commercial properties who develops and sells a mixed development project
(commercial portion)
YES
GOODSTime of Supply for Goods Goods are removed or made available; Tax invoice issued; or Payment receivedwhichever is the earliestSubject to 14-day rule
WHEN SHOULD YOU ACCOUNT FOR GST?
14-day Rule Tax invoice issued within 14 days when the
goods are removed
Time of supply is the tax invoice date, provided payment is not made yet
WHEN SHOULD YOU ACCOUNT FOR GST?
WHEN SHOULD YOU ACCOUNT FOR GST?
Total value of supply - $11,000
Invoice for payment Goods Invoice for Balancereceived $5,000 Removed Amount
$11,000 ($11,000 - $5,000)
01/03/07 31/03/07 14/04/07
Time of supply : ?
14-day Rule
WHEN SHOULD YOU ACCOUNT FOR GST?
Total value of supply - $11,000
Invoice for payment Goods Invoice for Balance received $5,000 Removed Amount
$11,000 ($11,000 - $5,000)
01/03/07 31/03/07 14/04/07
Time of supply : 01/03/07 ($5,000) 14/04/07 ($6,000)
14-day Rule
SERVICES
Time of Supply for Services Services are completed; Tax invoice issued; or Payment received
whichever is the earliest
Subject to 14-day rule
WHEN SHOULD YOU ACCOUNT FOR GST?
14-day Rule Tax invoice issued within 14 days when the
services are completed
Time of supply is tax invoice date, provided payment is not made yet
WHEN SHOULD YOU ACCOUNT FOR GST?
Value of Supply Consideration in money
Value + GST = Consideration
Eg: $100 (Value) + $7 (GST) = $107
WHAT IS THE VALUE OF SUPPLY THAT IS SUBJECT TO GST?
WHAT IS THE VALUE OF SUPPLY THAT IS SUBJECT TO GST?
Consideration not in money
Value of supply = open market value
Trade/cash discount given
Value of supply = discounted price
WHAT IS THE VALUE OF SUPPLY THAT IS SUBJECT TO GST?
Transactions with related parties
Value of supply = open market value Eg: Co. X, a GST-registered business, sold the
company’s furniture (market value $5,000) to one of its directors at $800.
Value of supply should be $5,000.
WHAT IS THE VALUE OF SUPPLY THAT IS SUBJECT TO GST?
Goods for private use Eg: Mr Y, a renovation contractor who is GST
registered, uses business goods such as marble tiles for his own home
If the cost of materials is $10,000,
GST = $10,000 x 7%
= $700
EXPORTS Zero-rated Evidence of exports required
Supporting export documents : Bill of Lading , Airway Bill IESGP permit (previously known
as TDB permit). Please note that permit must be taken before the export of goods, otherwise, the Comptroller may not
accept it as evidence
EXPORTS
Supporting export documents : invoice to overseas customer purchase order insurance documents packing list or delivery note addressed to overseas
customer evidence of payment received
1. Importance of Tax Invoice
2. When to issue a Tax Invoice?
3. When not to issue a Tax Invoice?
4. Contents of a Tax Invoice
5. Simplified Tax Invoice
TAX INVOICE
IMPORTANCE OF TAX INVOICE
primary document for input tax claim
documentary evidence that GST has been charged on the standard-rated supply
WHEN TO ISSUE A TAX INVOICE?
must be issued if making a standard-rated supply to a taxable person
within 30 days after time of supply
WHEN NOT TO ISSUE A TAX INVOICE?
No need to issue tax invoices for: zero-rated supplies
exempt supplies
deemed supplies
CONTENTS OF A TAX INVOICE
Tax invoice must show : an identifying number invoice date your customer’s name (or trading name) and address description of the goods and services your name, address and GST registration number
CONTENTS OF A TAX INVOICE the words “tax invoice” total amount payable excluding tax, the rate of
GST and the total tax chargeable shown separately
total amount payable, including tax breakdown of exempt, zero-rated or other supply,
stating separately the gross amount payable in respect of each
SIMPLIFIED TAX INVOICE
When to Issue? amount payable including tax <$1,000 only for standard-rated suppliesParticulars name, address and registration number date of issue description of the goods or services total amount payable including GST the words “Price Payable inclusive of GST”
PURCHASES
1. Claiming of input tax
2. Imports
3. Disallowed Input Tax Claims
4. Conditions for Pre-registration Input Tax
Claims
CLAIMING OF INPUT TAX
Tax Invoice
Evidence for claiming GST incurred on business purchases
Tax invoice addressed to business name
ABC Co.
CLAIMING OF INPUT TAX
Case 1 : Lack of Evidence Tax invoice issued to another person Co. claimed input tax based on tax invoices
issued to their related company The input tax was for purchases made by the
related co.
Input tax claims were disallowed
CLAIMING OF INPUT TAX
Case 2 : Private Expenditure holds valid tax invoices GST trader made claims on redevelopment of
residential property expenditure is of a private nature
input tax claims were disallowed and trader was compounded
IMPORTS
Importer - Person who is entitled to claim GST paid on imports
GST payment permit - Evidence to support input tax claims
DISALLOWED INPUT TAX CLAIMS(REG 26 & 27)
a) Club Subscription Feeb) Medical and Accident Insurance Premiumc) Medical Expensesd) Family Benefitse) Cost and Running Expenses of Motor Cars
CONDITIONS FOR PRE-REGISTRATION INPUT TAX CLAIMS
GOODS : Goods supplied to or imported by taxable
person NOT supplied or consumed before date of
registration Proper stock account is maintained
PRE-REGISTRATION CLAIMSGST registration date : 01/06/07Expenses Incurred :
Invoice Date Description Amount Claimable?i) 01/04/07 Purchase of stocks $1,000 Yes
ii) 30/04/07 Utilities charges $300 No
iii)15/05/07 Office rental $2,500 No
iv)01/05/07 Imports which $900 No are sold on 31/05/07
CONDITIONS FOR PRE-REGISTRATION INPUT TAX CLAIMS
SERVICES : Services provided to taxable person NOT related to goods supplied or consumed
before date of registration NOT supplied to taxable person more than 6
months before date of registration NOT provided by taxable person before date of
registration
PRE-REGISTRATION CLAIMSGST registration date : 01/06/07
Expenses Incurred :
Invoice Date Description Amount Claimable?
i) 01/11/06 Management fee $1,000 No
ii) 30/04/07 Consultancy fee $2,000 Yes
iii) 01/04/07 Commission fee $ 500 No for goods sold on
01/05/07
BAD DEBT RELIEF Entitled to claim Bad Debt Relief if you satisfy
conditions under Reg. 83 A “Self-Review of Eligibility to claim Bad
Debt Relief” Form available from website If you satisfy conditions, claim in Box 7 of
current GST return No need to write in for approval
GST Integrated Phone Service
Want to check whether we have received your GST return?
Request for Statement of account?
JUST CALL 1800 356 8633 (24-hour automated voice response system)
for all these and more ...
BREAKBREAK
Do you know you can access GST information at IRAS homepage?
Come visit us now @
http://www.iras.gov.sg(click ‘Information on Goods & Services Tax’)
You can ... Download GST forms and handbooks Find guides on GST form filling!
CONTENTS
Obligations GST F5 & F7 Common Misconceptions Application Exercise
OBLIGATIONS
1. Record Keeping
2. Filing Of GST F5
3. Payment Of Tax
4. Registration
5. Change Of Business Circumstances
6. GST - Inclusive Price
RECORD KEEPING
What Records To Keep?
Business and accounting records Tax invoices and receipts issued/received Credit notes and debit notes Business contract and agreement
RECORD KEEPING
What Records To Keep?
Tourist refund claim forms Import and export documents
(e.g. permit, bill of lading, airway bill)
Other documents supporting
change in consideration
RECORD KEEPINGExamples of Business and Accounting Records:- General Ledgers - Debtors and Creditors Ledgers- Purchase Orders and Delivery Notes- Purchase and Sales Books- Cash Books and other account books- Records of daily takings
RECORD KEEPING- Stock records- Bank Statements and Pay-in Slips - Relevant Business Correspondences- GST Accounts- Annual Account (e.g. balance sheet, profit & loss statement)
- Any other documents and records - GST guide on ‘How do I keep records and accounts’
RECORD KEEPING
Business goods put to non-business use
Disposal of business assets
Supplies of goods and services received
Removal of goods from Customs-licensed warehouse
Other Records
RECORD KEEPINGHow do you keep records and accounts?
no specific guidelines
complete and up-to-date
figures in GST Returns can be easily verified
RECORD KEEPING From 1 January 2007
- Can start to keep only 5 years of records- Records relating to accounting periods in 2007
and after Keep records for 7 years
- Records relating to accounting periods ending before 2007
RECORD KEEPING Comptroller’s written approval not required to keep records
in non-paper form
IRAS circular on ‘Wavier of requirement to seek IRAS’ approval for keeping of records in Machine Sensible Form / Imaging System and Electronic Invoicing’.
GST guides on ‘Keeping Machine Sensible Records & Electronic Invoicing’ and ‘Keeping of Records in Imaging Systems’
RECORD KEEPINGFailure to keep records
Guilty of an offence fine < $5,000 and/or imprisonment <6 months
2nd or subsequent conviction fine < $10,000 and/or imprisonment < 3 years
FILING OF GST F5
FILING One GST F5 for One Prescribed Accounting Period
YOU MUST NOT USE:
Forms issued for Other Periods
FILING OF GST F5
DUE DATE
within 1 month after the end of each accounting period
Eg : Due date for period 01/10/06 to 31/12/06 is 31/01/2007
FILING OF GST F5
All Tax Returns Must Be Filed By Due Date
If No Trading Is Done, a ‘Nil’ Return Is Still Required.
FILING OF GST F5
FAILURE TO FILE RETURN ORMAKE INCOMPLETE RETURN:
An Offence
Comptroller Can Assess Amount of Tax Due
Notice of Assessment (Estimated) Will Be Sent to Trader
PAYMENT OF TAX
DUE DATE
within 1 month after end of each accounting period
MODES OF PAYMENT
Giro or Cheque Cross all cheques and make them payable
to “Comptroller of Goods and Services Tax”
PAYMENT OF TAX
If Net Amount Payable <$5, No Payment Is Required
If Net Amount Repayable <$5, No Refund Will Be Made
The Amount Will Not Be Carried Forward
REGISTRATION
Just A Reminder ... Compulsory Registration Voluntary Registration
- must remain registered for at least 2
years
Registration
With effect from 15 Sep 1999, we no longer issue GST registration certificate and you are not required to display at your business premises
GST Certificate
Registration
As a GST registered trader, you must print your GST registration number on your tax invoices, simplified tax invoices and serially printed receipts
If You Are Registered As A Sole-Proprietor
Registered for GST in your individual name
Value of taxable supplies is the aggregate taxable turnover of all your sole-proprietorship businesses
Charge GST on supplies made by all your sole-proprietorship businesses
If You Are Registered As A Sole-ProprietorQn: What if you set up another sole- proprietorship business in future, do you need to register this new business?
Ans: No, because you, as the sole-proprietor, are already registered.
If You Are Registered As A Sole-Proprietor
You should use the same GST registration number to charge GST with effect from the dateof commencement of new business
What you must do: Send in ACRA instant information extract of the
new business
If You Are Registered As A Partnership
Registration is in the name of the respective
firms Value of taxable supplies is the aggregate
taxable turnover of all partnerships having the same composition of partners
If You Are Registered As A Partnership Charge GST on supplies made by all other
partnerships with the same composition of partners
Qn: What should you do if you set up another partnership business with the same composition of partners?
If You Are Registered As A Partnership
Ans: Send in ACRA instant information extract of the new business and GST F3 immediately.
A separate GST registration number will be given for the new business.
You are required to charge and account for GST from date of commencement of new
business.
CHANGE OF BUSINESS CIRCUMSTANCES Changes involve
Business name and address
Giro bank account number
De-registration
Transfer of business as a going concern
CHANGE OF BUSINESS CIRCUMSTANCES
Write in to inform Comptroller within 30 days Do not delay
- Refund could be delayed
- Transfer of Business, penalties may
apply for late notification
CEASE TO MAKE TAXABLE SUPPLIES
Notify Comptroller by submitting GST F9 (Application for Cancellation of GST)
Within 30 days
CEASE TO MAKE TAXABLESUPPLIES
Once your application is approved, GST F8 (Final Goods and Services Tax Return) will be issued
Need to account for deemed output tax- if value of your assets on hand including stock,
fixed assets and non-residential properties (for which input tax has been allowed previously) exceeds $10,000
TRANSFER OF BUSINESS AS A GOING CONCERN Eg: Business was converted from a partnership
to a private limited
Notify the Comptroller 30 days before the date of transfer
GST-INCLUSIVE PRICEGST-INCLUSIVE PRICE
ABC Co. Pte Ltd
$107.00
Any price displays, Any price displays, advertisements, or quotations in advertisements, or quotations in respect of goods or services respect of goods or services made to the public should be made to the public should be inclusive of GSTinclusive of GST
Failure to comply with the GST-Failure to comply with the GST-inclusive price display inclusive price display requirement is an offence requirement is an offence
GST RETURNS
How To Complete :
1. GST F5
2. GST F7
HOW TO COMPLETE GST F5
Box 1: Total value of standard-rated supplies
(excluding GST Amount)
Include: Sale of goods & services (generally local
supplies) Sale of business assets Deposits received as part payment Supplies to staff
HOW TO COMPLETE GST F5
Box 1: Total value of standard-rated supplies
(excluding GST Amount)
Include: Hire of goods to someone else Gift of goods costing > $200
Deduct: Credit note issued to customers Debit note received from customers
HOW TO COMPLETE GST F5
Box 2: Total value of zero-rated supplies
Include:
Supplies of goods which are exported
Supplies of international services
HOW TO COMPLETE GST F5
Box 3: Total value of exempt supplies
Include:
Supplies of financial services
(4th Schedule)
Sale and lease of residential properties
HOW TO COMPLETE GST F5
Box 5: Total value of taxable purchases (excluding GST Amount)
Include: Standard-rated purchases Imports Zero-rated purchases
(Egs: IDD calls, International Freight Charges, Air Tickets)
HOW TO COMPLETE GST F5
...cont’d (taxable purchases)
Deduct:
Debit note issued to suppliers
Credit note received from suppliers
HOW TO COMPLETE GST F5
* Not to enter for taxable purchases*
Wages & salaries Purchases for private use Purchases from non GST-registered suppliers
HOW TO COMPLETE GST F5
* Not to enter for taxable purchases * Purchases and maintenance of motor cars Family benefits Employee medical & insurance expenses Club subscription & entrance fees
HOW TO COMPLETE GST F5
Box 7 (input tax)
Includes: allowable input tax incurred on your taxable
purchases refund of GST to tourists bad-debt relief
HOW TO COMPLETE GST F5
Input tax errors
Eg: Computational Errors Double claiming of input tax A company used a spreadsheet program to
prepare input tax claims The formula in the spreadsheet was wrong
resulting in double claiming of input tax
HOW TO COMPLETE GST F5
Please note: To drop off cents for Boxes 1 to 5 & 9 Declare figures in S$, not in foreign currencies All boxes must be completed
HOW TO COMPLETE GST F5
Example:
ABC company has the following business transactions for one accounting period:1) Imports - $20,0002) Local sale - $10,0003) Sale of fixed asset - $5,0004) Local purchase - $8,0005) Export sales - $50,000
HOW TO COMPLETE GST F5
To which boxes do they belong ?
1) Imports - $20,000 (Box 5)
2) Local sale - $10,000 (Box 1)
3) Sale of fixed asset - $5,000 (Box 1)
4) Local purchase - $8,000 (Box 5)
5) Export sales - $50,000 (Box 2)
HOW TO COMPLETE GST F5
What about Box 6 (output tax) and Box 7
(input tax) ?
1) Imports - $20,000 GST - $1,400 (Box 7)2) Local sale - $10,000 GST - $700 (Box 6)
3) Fixed asset - $5,000 GST - $350 (Box 6)
4) Local purchases - $8,000 GST - $560 (Box 7)
5) Export sales - $50,000 GST charged at 0%
HOW TO COMPLETE GST F5Box 1 Standard-rated supplies $15,000Box 2 Zero-rated supplies $50,000 Box 3 Exempt supplies $0Box 4 Total of Box 1+2+3 $65,000Box 5 Taxable purchases $28,000Box 6 Output tax $1,050.00Box 7 Input tax $1,960.00Box 8 Net GST to be claimed $910.00Box 9 Total imports under MES $0
GST F7 (Disclosure of Errors in GST Return)Purpose: To disclose errors made in the GST F5
But you do not use it for all errors!
The following chart will help you determine if you need to file F7(s) for your errors
ERRORS
Do the errors involve GST?
Is the amount of net GST errors > $500?
File in F7
Is the total of all errors > 5% of total supplies?
Include the errors in the next return
NO
NO
NO
YES
YES
YES
GST F7 (Disclosure of Errors in GST Return)Example 1
Errors involve GST (values of supplies and purchases are correct)
Qtr 1: Overdeclared by $300
Qtr 2: Underdeclared by $200
Qtr 3: Overdeclared by $250
GST F7 (Disclosure of Errors in GST Return)
Net GST error =+300 - 200 +250 = $350
As the net error is $350 (<$500), no need to file GST F7. Just adjust in Box 7 of current GST F5.
GST F7 (Disclosure of Errors in GST Return)
Example 2
Errors do not involve GST
Standard-rated supplies error = $200 (output tax is correct)
Zero-rated supplies error = $10,000
Taxable purchases error = $500 (input tax is correct)
GST F7 (Disclosure of Errors in GST Return)
Total errors = $200 +10,000 + 500 = $10,700
Total supplies = $150,000
Percentage of error to total supplies
= $10,700/$150,000 X 100
= 7% (>5%)
=> File GST F7 for the quarter the error was made
GST F7 (Disclosure of Errors in GST Return)
How can I obtain the GST F7?You can: call GST Integrated Phone Service at 1800-356 8633
(Option 4) request through your TaxPortal write in visit us personally at our Taxpayer Services Centre
(1st floor, Revenue House) – Letter of Authority required
VOLUNTARY DISCLOSURE
Take steps to ensure compliance with GST Legislation
File true and complete returns Remember: Always do it right the first time
VOLUNTARY DISCLOSURE Good practice: To review past returns and
disclose errors by filing the GST F7 and make the necessary adjustments.
Otherwise, heavier penalty will be imposed if the errors are discovered by us.
Submission of incorrect return Omission/understatement of output tax or
overstatement of input tax; or Gives any incorrect information
Penalty = Amount of tax undercharged
Submission of incorrect return Without reasonable excuse or negligence
Penalty = 2 X Amt of tax undercharged; and
Fine < $5,000; or Imprisonment < 3 years; or both
COMMON MISCONCEPTIONS
COMMON MISCONCEPTIONS
1. Gifts : need not account GST
2. Trade-in : charge GST on net amount
3. Non-reporting of supplies On-charging of supplies Absorption of GST
COMMON MISCONCEPTIONS
4. Tourist Refund Scheme:
Tourist can claim GST based on tax invoices only
Misconception No. 1Gifts : Need not account GST
Conditions for accounting GST on gifts :
Incurred GST on purchase of goods Cost of gift > $ 200 or
Cost of gift < $ 200, but 3 or more gifts given to the same person within 3 months
GIFTS >$200 / SERIES OF GIFTS.
GST must be accounted on goods given out as Lucky Draw prizes eg. Dinner & Dance lucky draw prizes
Hampers/Gifts to clients
Misconception No. 2Trade-in : Charge GST on net amount GST must be accounted on the value of the 2
separate supplies
Incorrect to account GST on the net difference only
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Misconception No. 3Non-reporting of supplies On-Charging of Supplies
Absorption of GST
ON-CHARGING OF SUPPLIES
Reimbursements vs Disbursements
Reimbursements - supply attracts GST
Disbursements - do not attract GST
DISBURSEMENTS OR REIMBURSEMENTSDISBURSEMENTS OR REIMBURSEMENTS
Both involve payments to third parties “on behalf” of another party.
GST treatment depends on whether the payment is treated as a disbursement or a reimbursement (rebilling).
Disbursement: No GST chargeable
Reimbursement: GST chargeable
GST CONCEPTGST CONCEPT
Section 8(1)of GST Act:
“Tax shall be charged on any supply of goods or services made in Singapore where it is a taxable supply in the course or furtherance of any business carried on by him.”
WHAT IS A SUPPLY?WHAT IS A SUPPLY?
“…includes all forms of supply, but not anything done otherwise than for a consideration”
Section 10(2)(a) of the GST Act:
•Contract for gds and svcs is between Co A & 3rd party.
•Tax Invoice is issued to Co A.
•Co A is legally responsible to pay 3rd party for the gds & svcs.
DISBURSEMENTS OR REIMBURSEMENTSDISBURSEMENTS OR REIMBURSEMENTS
3rd party(Supplier)
Co A Co B(Main Contractor)
Disbursement: No Supply, no GST chargeable
•Contract for goods and services is directly between Co B and 3rd party.
•Tax invoice is issued to Co B.
•Co B is legally responsible to pay 3rd party for the goods and services.
•Onward supply
Reimbursement: A supply exists and GST chargeable
ABSORPTION OF GST
I wish to absorb the GST on my sales. Do I have to pay any GST to IRAS?
GST must be accounted to IRAS on supplies even if you absorb GST. The GST is calculated as follows:
GST = 7/107 x selling price
Eg : selling price=$100GST = 7/107 x $100 = $6.54
Misconception No. 4Tourist Refund Scheme : Tourist can claim GST based on tax invoices only
For tourist who buys goods from you to qualify for refund:
- You must participate under Tourist Refund Scheme
- You must issue tax-free shopping cheque(s) or refund claim form(s) to
tourists so as to enable them to claim GST
Global Refund Singapore Pte Ltd : 6225 6238
Premier Tax Free (Singapore) Pte Ltd : 6293 3811
Singapore Retailer Association : 6223 6221
TOURIST REFUND SCHEME
Application Exercise
APPLICATION EXERCISEAnswers to Exercise
Supplies :
1) Export sales : zero-rated supply <0%>
2) Local sales : standard-rated supply <7%>
3) Disposal of business asset <7%>
4) Interest income : <exempt supply>
5) Value of gift >$200 : Deemed supply <7%>
6) Payment of wages and salaries <Out-of-scope supply>
APPLICATION EXERCISE
Answers to Exercise
Purchases/ Payment :
7) Taxable purchase <claimable>
8) Taxable purchase <claimable>
9) Non-taxable purchase <not applicable>
10) Not allowable under Regulation 26 <not claimable>
CONTENTS
Penalties & Recovery Actions
PENALTIES ON NON / LATE SUBMISSION OF GST F5 $200.00 PER COMPLETED MONTH ( MAXIMUM $10,000 FOR EACH RETURN )
Eg: GST F5 for the quarter ended 31 Dec 2006 due on 31 Jan 2007.
GST F5 filed on 14 May 2007No. of months late = 3 (Feb to Apr)Amount of penalties = $600.00 (3 x $200)
PENALTIES ON NON / LATE SUBMISSION OF GST F5
FINE NOT EXCEEDING $5,000 AND IN DEFAULT OF PAYMENT TO IMPRISONMENT NOT EXCEEDING 6 MONTHS
DIRECTOR’S LIABILITY (S74(1) OF THE GST ACT)
USEFUL INFORMATION RE: GST F5 ISSUANCE OF GST F5
NOTIFICATION OF CHANGE OF ADDRESS
CONFIRMATION OF RETURN RECEIVED GST HELPLINE: 1800-356 8633
PENALTIES ON NON / LATE PAYMENT OF GST
5 % ON OUTSTANDING TAX
ADDITIONAL PENALTY OF 2% OF TAX OUTSTANDING ADDED FOR EACH COMPLETED MONTH UP TO MAXIMUM 50% OF TAX OUTSTANDING
RECOVERY ACTIONSNON-FILING OF GST RETURN
ISSUE OF DEFAULT ASSESSMENT
IMPOSE PENALTIES ON NON / LATE SUBMISSION OF GST F5
ISSUE SUMMONS TO ATTEND COURT
RECOVERY ACTIONSNON PAYMENT OF TAX
IMPOSE PENALTIES ON TAX OUTSTANDING
APPOINT OTHER PARTY AS AGENT eg. BANK, TENANT
STOP INDIVIDUAL FROM LEAVING THE COUNTRY
TAKE LEGAL ACTIONS
Q & A Session
Last update on 17 April 2007