gst on legal practitioners
DESCRIPTION
Legal practitioners services like other services are subject to GST. Whether the practitioner are sole-proprietor or a partnership, they are required to register if their annual turnover exceed the threshold limit of RM500,000. What other detail need to take care? Follow up with us....TRANSCRIPT
GST ON LEGAL
PRACTITIONERS
Loh Boon HowChartered
Accountant
2
Where is the service provided?
B. H. Loh & Associates
Local Legal practitioner Oversea customer
Billing in Malaysia
Supply exported (0%)
3
Where is the service provided?
B. H. Loh & Associates
Foreign Legal practitioner
Local customer
Corporation – account for it
Supply imported (6%)
Individual – not account for it
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Where is the service provided?
B. H. Loh & Associates
Local Legal practitioner Designated area
Labuan
Supply exported (0%)
TiomanLangkawi
5
Where is the service provided?
B. H. Loh & Associates
Designated area Legal practitioner (registered and account GST) Customer in Malaysia
Labuan
Supply imported (6%)
TiomanLangkawi
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Where is the service provided?
B. H. Loh & Associates
Designated area Legal practitioner
Customer at Designated area
Labuan
Disregarded Supply (No GST)
TiomanLangkawi
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What are the service charged? All charges
1. Contentious or non-contentious business,
2. Preparing and completing agreements,
3. Conducting and completing the transaction,
4. Prepare a filing,
5. Witnessing of miscellaneous documents
B. H. Loh & Associates
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What are the service charged? Miscellaneous expenses
1. Cost of extra work,
2. Travelling or accommodation,
3. Allowances for the solicitor and clerks,
4. Copying and stationery.
B. H. Loh & Associates
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What are the service charged? Interest charged on late payment – No
GST (An out of scope supply).
B. H. Loh & Associates
Who is liable to register?
B. H. Loh & Associates10
Sole proprietorship
Conventional Partnership
GST Registration
RM500,000
12 succeeding / preceding
months
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What is the annual turnover? All charges, Other charges excluded the
disbursement, Deemed supplier such as private use of
business assets, If branches – combined the turnover
from all branches,
B. H. Loh & Associates
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What is the condition to register a branch separately?
(a) Every separately registered branch has the same taxable period.
(b) It is likely to cause difficulty for taxable person to submit a single return.
(c) All branches must registered although one branch is below threshold.
B. H. Loh & Associates
B. H. Loh & Associates 13
What is the condition to register a branch separately?
(d) Each branch will be given a separate GST number and make their own return. However, the main branch remains accountable for all GST liability for all branches.
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When is the time to charge output tax?
(a) The date of receipt of payment;
(b) The date of issue of a tax invoice, or
(c) When the money transfers from the client’s account to the office account
However, upon completion of services and you issued a tax invoice within 21 days, you accounted GST based on the date of invoice.
B. H. Loh & Associates
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When is the time to charge output tax? If the deposit part of the consideration –
GST chargeable when the time of the deposit.
If the deposit is used as security and fully refunded – No GST will be chargeable.
B. H. Loh & Associates
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What is chargeable income? Non-billed income : oath fees
1. Subject to GST, as consideration for supply of service,
2. Not subject to GST, if the individual retains the fee in a personal capacity,
B. H. Loh & Associates
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What is a disbursement? A payment on behalf of a client for goods
and services to a third party The condition :
1. The legal practitioner acted for his client when paying the third party.
2. The client actually received and used the goods or services provided by the third party.
3. The client knows that the goods or services would be provided by the third party.
B. H. Loh & Associates
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What is a disbursement?4) The client authorized the legal practitioner
to make payment on his behalf.
5) The client was responsible for paying the third party.
6) The payment is separately itemized when invoicing the client.
7) The legal practitioner recovers only the exact amount which he paid to the third party.
B. H. Loh & Associates
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What is a disbursement?8) The goods and services paid for are
clearly additional to the supplies which the legal practitioner makes to the client.
Disbursements include statutory fees such as stamp duties, estate duties, court fees, land registry fees and payment for expert witness, professional services of third parties.
B. H. Loh & Associates
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What are the general expenses?
1. General expenses such as telephone, telex, postage, advertising, and stationery charges are incurred in the course of providing services to the client,
2. Report for his own use – general expenses,
3. Passes on the report to his client – disbursement.
B. H. Loh & Associates
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How to claim an input tax? The disbursement without GST – the
legal practitioner and client not allow to claim an input tax,
The disbursement with GST – the legal practitioner and client can claim the input tax.
B. H. Loh & Associates
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Who can claim an input tax? The recipient of the service or goods is
entitled to recover the GST.
B. H. Loh & Associates
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How do I account for GST during the spanning periods?
B. H. Loh & Associates
1/4/2015
GST implementation
Service tax GST
Apportioned by time spent, transactions or number of court attendance.
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B. H. Loh & Associates
Address :
No. 1-3-15, Goldhill Complex,
Tingkat Paya Terubong 1,
11060 Penang.
H/P No. : 016-4893382
Email : [email protected]
Web-site / facebook : bhloh.com.my
B. H. Loh & Associates
Thank you