3 COURSE MATERIAL Q&A question slip GST General Guide for Traders How do I keep Records and AccountsHow do I prepare my GST Return?Lecture Notes on GST ClassGST Class Feedback FormSlip on IRAS Homepage
4 CONTENTS Overview Of GST System How GST works Concepts Of GST Scope Of TaxExportsTax InvoicePurchasesObligationsGST F5 & F7Slide 2- How GST works- GST concepts- Responsibilities of a GST registered trader- Exports- Purchases and Imports- Record keeping- Obligations- How to complete the GST return
5 CONTENTS Common Misconceptions Application Exercise Penalties & Recovery ActionsQ & A sessionFeedbackSlide 3- Change of business circumstances- Common misconceptions- Common errors- Application exercise- Q & A session- Feedback
6 OVERVIEW OF GST SYSTEM What is GST? - tax on domestic consumption - paid whenever customers buy goodsor services from GST registeredbusinesses- charged and accounted for at a rate of7% (with effect from 1 July 2007)
7 OVERVIEW OF GST SYSTEM Are All Goods And Services Taxable? - All Goods and Services within the GST Systemare taxable except those which have beenspecifically exempted by the Act- Main exempt items are financial services andthe sale or lease of residential properties
8 OVERVIEW OF GST SYSTEM Who Collects GST? - For supply of goods or services inSingapore, GST is collected by traderslike you who have registered with theComptroller of GST- For importation of goods, GST is collectedby the Singapore Customs at the point ofimportation
9 HOW GST WORKS Basic GST Process (Output Tax) GST collected from customersSlide 6When you take the GST that you collected (that is the Output Tax) minus the GST you have paid (the Input Tax), you arrived at the Net GST amount.
10 HOW GST WORKS Basic GST Process (Output Tax) (Input Tax) GST collected less GST paid onfrom customers business purchasesSlide 6When you take the GST that you collected (that is the Output Tax) minus the GST you have paid (the Input Tax), you arrived at the Net GST amount.
11 HOW GST WORKS Basic GST Process (Output Tax) (Input Tax) GST collected less GST paid onfrom customers business purchasesequalsNet GSTSlide 6When you take the GST that you collected (that is the Output Tax) minus the GST you have paid (the Input Tax), you arrived at the Net GST amount.
12 HOW GST WORKS + - Basic GST Process Net GST Payable to Refundable from + -Payable to Refundable fromComptroller ComptrollerSlide 7If this Net GST amount is a positive figure (meaning that the GST you collected is greater than the GST you have paid out), then the amount is payable to the Comptroller of GST. On the other hand, if the Net GST amount is a negative figure (meaning that the GST you have paid is greater than the GST you have collected, then the Net GST amount is refundable to you from the Comptroller.
14 CONCEPTS OF GST Scope of Tax Types of Supply When Should You Account for GST?What Is the Value of Supply That Is Subject to GST?Slide 9- the scope of tax- what transactions attract GST- when to account for GST- what is the amount that is subjected to GST
15 SCOPE OF TAX Section 8 of GST Act GST 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
16 SCOPE OF TAXSupply includes all forms of supply done for a consideration.Slide 11What is supply? Supply includes all forms of supply done for a consideration.Forms of supply can be either goods or services
17 SCOPE OF TAX MADE IN SINGAPORE? PLACE OF SUPPLY Goods are supplied in Singapore ifgoods are in Singapore or from SingaporeServices are supplied in Singapore ifsupplier belongs in Singapore
18 SCOPE OF TAX TAXABLE SUPPLY - A supply of goods or services made in Singapore other than an exemptsupply- Consist of standard-rated and zero-rated supplies
19 SCOPE OF TAX Taxable Person - A person that is GST-registered or is required to be registered for GSTunder the Act
20 TYPES OF SUPPLY Non-Taxable Taxable Out-of-Scope Exempt Slide 12 What transactions attract GST? To answer this, we need to look at the various types of supplies.We can categorise the supplies into 2 groups, that is the non-taxable and the taxable supply. As the name suggests, non-taxable supplies are supplies which do not attract GST. This category can be sub-divided into out-of-scope and exempt supplies.
21 TYPES OF SUPPLY Non-Taxable Taxable Out-of-Scope Exempt Zero-rated (0%)Slide 13Taxable supply refers to supplies which attract GST. This would include standard rated supply and zero-rated supply.Standard-rated (7%)
22 NON-TAXABLE SUPPLY Out -of-scope Supply Private Transactions Third Country Sales(Sales outside Singapore)Exempt SupplySale and Lease of Residential PropertiesFinancial Services
23 without coming into S’pore Goods are shipped fromChina to U.S.A.without coming into S’poreSupply isout-of-scope
24 TAXABLE SUPPLY Zero-rated Supply (0% GST) Export of Goods International ServicesStandard-rated Supply (7% GST)All OthersEg: Sale of Fixed Assets
25 TAXABLE SUPPLY SALE OF FIXED ASSETS GST must be charged on the sale of Fixed AssetsEg : Non residential properties, furniture, computers, etcGST to be accounted on SellingPrice of Asset
26 TAXABLE SUPPLY GST is a transaction based tax Need to review all transactions including those not in the normal course of businessI would like to stress here that GST is a transaction based tax. Thus, you will need to review your transactions to see if it amounts to a taxable supply. And whether GST needs to be charged accordingly.If you notice here, there is a special treatment on gifts. Let us now take a look at when to account for output tax on gifts.
31 WHEN SHOULD YOU ACCOUNT FOR GST? GOODSTime of Supply for GoodsGoods are removed or made available;Tax invoice issued; orPayment receivedwhichever is the earliestSubject to 14-day rule
32 WHEN SHOULD YOU ACCOUNT FOR GST? 14-day RuleTax invoice issued within 14 days when the goods are removedTime of supply is the tax invoice date, provided payment is not made yet
33 WHEN SHOULD YOU ACCOUNT FOR GST? 14-day RuleTotal value of supply - $11,000Invoice for payment Goods Invoice for Balancereceived $5, Removed Amount $11, ($11,000 - $5,000)01/03/ /03/ /04/07Time of supply : ?
34 WHEN SHOULD YOU ACCOUNT FOR GST? 14-day RuleTotal value of supply - $11,000Invoice for payment Goods Invoice for Balancereceived $5, Removed Amount$11, ($11,000 - $5,000)01/03/ /03/ /04/07Time of supply : 01/03/07 ($5,000)14/04/07 ($6,000)
35 WHEN SHOULD YOU ACCOUNT FOR GST? SERVICESTime of Supply for ServicesServices are completed;Tax invoice issued; orPayment receivedwhichever is the earliestSubject to 14-day rule
36 WHEN SHOULD YOU ACCOUNT FOR GST? 14-day RuleTax invoice issued within 14 days when the services are completedTime of supply is tax invoice date, provided payment is not made yet
37 WHAT IS THE VALUE OF SUPPLY THAT IS SUBJECT TO GST? Consideration in moneyValue + GST = ConsiderationEg: $100 (Value) + $7 (GST) = $107
38 WHAT IS THE VALUE OF SUPPLY THAT IS SUBJECT TO GST? Consideration not in moneyValue of supply = open market valueTrade/cash discount givenValue of supply = discounted price
39 WHAT IS THE VALUE OF SUPPLY THAT IS SUBJECT TO GST? Transactions with related partiesValue of supply = open market valueEg: 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.
40 WHAT IS THE VALUE OF SUPPLY THAT IS SUBJECT TO GST? Goods for private useEg: Mr Y, a renovation contractor who is GST registered, uses business goods such as marble tiles for his own homeIf the cost of materials is $10,000,GST = $10,000 x 7%= $700
41 EXPORTS Supporting export documents : Zero-rated Evidence of exports requiredSupporting export documents :Bill of Lading , Airway BillIESGP permit (previously knownas TDB permit). Please note that permitmust be taken before the export of goods,otherwise, the Comptroller may notaccept it as evidenceEXPORTS are zero-rated ss.You nd to maintain export documents as evidence of exports.Examples of such documents include the following:READ SLIDE…
42 EXPORTS Supporting export documents : invoice to overseas customer purchase orderinsurance documentspacking list or delivery note addressed to overseas customerevidence of payment receivedREAD SLIDEIMPT: In the event if you are unable to satisfy the Comptroller, by way of documentary evidence that you’ve exported the goods you’ve to std-rate the ss and charge GST accordingly.
43 TAX INVOICE Importance of Tax Invoice When to issue a Tax Invoice? When not to issue a Tax Invoice?Contents of a Tax InvoiceSimplified Tax InvoiceREAD SLIDE
44 IMPORTANCE OF TAX INVOICE primary document for input tax claimdocumentary evidence that GST has been charged on the standard-rated supplyFor purchases, the tax invoice is a primary document for GST purpose to support input tax claims.Tax Invoice is an impt documentary evidence that GST has been charged on the std-rated ss.
45 WHEN TO ISSUE A TAX INVOICE? must be issued if making a standard-rated supply to a taxable personwithin 30 days after time of supplySo, When do you issue a tax invoice?Tax Invoice must be issued when you make a std-rated ss.It applies to all std-rated supplies including sale of fixed assets and not just for your normal sales.Tax invoice has to be issued within 30 days from the time of ss.
46 WHEN NOT TO ISSUE A TAX INVOICE? No need to issue tax invoices for:zero-rated suppliesexempt suppliesdeemed suppliesREAD SLIDEDeemed SuppliesAn example of deem ss is free gift where the cost of gift is more than $200 or 3 gifts or more are given to the same person within a period of 3 mths.Note: Although tax invoices need not be issued, you are still required to issue normal commercial invoices, where appropriate.
47 CONTENTS OF A TAX INVOICE Tax invoice must show :an identifying numberinvoice dateyour customer’s name (or trading name) and addressdescription of the goods and servicesyour name, address and GST registration numberREAD SLIDE
48 CONTENTS OF A TAX INVOICE the words “tax invoice”total amount payable excluding tax, the rate of GST and the total tax chargeable shown separatelytotal amount payable, including taxbreakdown of exempt, zero-rated or other supply, stating separately the gross amount payable in respect of eachREAD SLIDEWhere tax invoice is issued in foreign currency, it must be converted to Sing dollars using the prevailing exchange rate when the supply takes place.
49 SIMPLIFIED TAX INVOICE When to Issue?amount payable including tax <$1,000only for standard-rated suppliesParticularsname, address and registration numberdate of issuedescription of the goods or servicestotal amount payable including GSTthe words “Price Payable inclusive of GST”READ SLIDEFor non-GST registered customers, you can just issue receipts instead of tax invoices.
50 PURCHASES Claiming of input tax Imports Disallowed Input Tax Claims Conditions for Pre-registration Input Tax ClaimsREAD SLIDE
51 CLAIMING OF INPUT TAX Tax Invoice Evidence for claiming GST incurred on business purchasesTax invoice addressed to business nameABC Co.Con’tAs mentioned earlier, tax invoices acts as the evidence for making I/p tax claimsYou’re only allowed to claim GST based on tax invoices that are addressed to your biz name.LET ME SHOW YOU SOME CASES WHERE TRADERS HAVE MADE WRONGFUL CLAIMS
52 CLAIMING OF INPUT TAX Case 1 : Lack of Evidence Tax invoice issued to another personCo. claimed input tax based on tax invoices issued to their related companyThe input tax was for purchases made by the related co.Input tax claims were disallowedHere, we’ve a case of “Lack of Evidence”Tax invoice is issued to another person (for eg, a related co.)The GST-registered trader claimed i/p tax based on the tax invoice issued to their related co.The i/p tax was for purchases made by the related co.Thus, this i/p tax is disallowed.
53 CLAIMING OF INPUT TAX Case 2 : Private Expenditure holds valid tax invoicesGST trader made claims on redevelopment of residential propertyexpenditure is of a private natureinput tax claims were disallowed and trader was compoundedNext, we’ve a case where the trader claims GST on private expenditureTrader holds a valid tax invoiceBut GST is incurred on expenses on the redevelopment of his own residential propertyExpenditure is of a private nature.Therefore, i/p tax is disallowed and trader was compounded.
54 IMPORTS Importer - Person who is entitled to claim GST paid on imports GST payment permit - Evidence to support input tax claimsWe’ll now look at “IMPORTS”The importer will be the one who is able to claim for GST paid upon the importation of gdsThe GST payment permit or the Cargo Clearance Permit must be maintained as evidence of claims. Further, you will also need to keep other doc like invoice from the overseas suppliers and shipping doc.In order to claim i/p tax, the permit must bear your name as the importer and the gds are imported for your biz purpose.
55 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
56 CONDITIONS FOR PRE-REGISTRATION INPUT TAX CLAIMS GOODS :Goods supplied to or imported by taxable personNOT supplied or consumed before date of registrationProper stock account is maintainedIf you incur i/p tax claims prior to your effective date of registration, you must write in to the Comptroller of GST for approval before making the claims.The Conditions for pre-registration claims on Goods are:READ SLIDE
57 PRE-REGISTRATION CLAIMS GST registration date : 01/06/07Expenses Incurred :Invoice Date Description Amount Claimable?i) 01/04/ Purchase of stocks $1, Yesii) 30/04/07 Utilities charges $ Noiii)15/05/07 Office rental $2, Noiv)01/05/07 Imports which $ Noare sold on 31/05/07
58 CONDITIONS FOR PRE-REGISTRATION INPUT TAX CLAIMS SERVICES :Services provided to taxable personNOT related to goods supplied or consumed before date of registrationNOT supplied to taxable person more than 6 months before date of registrationNOT provided by taxable person before date of registrationConditions for pre-registration claim on SERVICES received prior to the effective date of registration are:
59 PRE-REGISTRATION CLAIMS GST registration date : 01/06/07Expenses Incurred :Invoice Date Description Amount Claimable?i) 01/11/06 Management fee $1, Noii) 30/04/07 Consultancy fee $2, Yesiii) 01/04/07 Commission fee $ No for goods sold on01/05/07
60 BAD DEBT RELIEFEntitled to claim Bad Debt Relief if you satisfy conditions under Reg. 83A “Self-Review of Eligibility to claim Bad Debt Relief” Form available from websiteIf you satisfy conditions, claim in Box 7 of current GST returnNo need to write in for approval
61 GST Integrated Phone Service Want to check whether we have received your GST return?Request for Statement of account?JUST CALL(24-hour automated voice response system)for all these and more ...
62 BREAK I’ve now come to the end of the first part of the presentation. You may go for a 15 mins break & pls be seated by __________.If you’ve any query, pls write them down on the paper provided and drop them into the box outside the audi when you go for your break.If you wish to go to the restrooms, you may turn right after leaving the door.If you want a drink, you may take the lift to the Café at 2nd level.Thank you.
63 Download GST forms and handbooks Find guides on GST form filling! Do you know you can access GST information at IRAS homepage? Come visit us (click ‘Information on Goods & Services Tax’)You can ...Download GST forms and handbooksFind guides on GST form filling!Slide 2- How GST works- GST concepts- Responsibilities of a GST registered trader- Exports- Purchases and Imports- Record keeping- Obligations- How to complete the GST return
64 CONTENTS Obligations GST F5 & F7 Common Misconceptions Application ExerciseSlide 3- Change of business circumstances- Common misconceptions- Common errors- Application exercise- Q & A session- Feedback
65 OBLIGATIONS Record Keeping Filing Of GST F5 Payment Of Tax RegistrationChange Of Business CircumstancesGST - Inclusive Price
66 RECORD KEEPING What Records To Keep? Business and accounting records Tax invoices and receipts issued/receivedCredit notes and debit notesBusiness contract and agreement
67 RECORD KEEPING What Records To Keep? Tourist refund claim forms Import and export documents(e.g. permit, bill of lading, airway bill)Other documents supportingchange in consideration
68 RECORD KEEPING Examples of Business and Accounting Records: General LedgersDebtors and Creditors LedgersPurchase Orders and Delivery NotesPurchase and Sales BooksCash Books and other account booksRecords of daily takings
69 RECORD KEEPING Stock records Bank Statements and Pay-in Slips Relevant Business CorrespondencesGST AccountsAnnual Account (e.g. balance sheet, profit & loss statement)Any other documents and recordsGST guide on ‘How do I keep records and accounts’
70 RECORD KEEPING Business goods put to non-business use Other RecordsBusiness goods put to non-business useDisposal of business assetsSupplies of goods and services receivedRemoval of goods from Customs-licensed warehouse
71 RECORD KEEPING How do you keep records and accounts? no specific guidelinescomplete and up-to-datefigures in GST Returns can be easily verified
72 RECORD KEEPING From 1 January 2007 Keep records for 7 years Can start to keep only 5 years of recordsRecords relating to accounting periods in 2007 and afterKeep records for 7 years- Records relating to accounting periods ending before 2007
73 RECORD KEEPINGComptroller’s written approval not required to keep records in non-paper formIRAS 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’
74 RECORD KEEPING Failure to keep records Guilty of an offence fine < $5,000 and/orimprisonment <6 months2nd or subsequent convictionfine < $10,000 and/orimprisonment < 3 years
75 FILING OF GST F5FILINGOne GST F5 for One Prescribed Accounting PeriodYOU MUST NOT USE:Forms issued for Other Periods
76 FILING OF GST F5DUE DATEwithin 1 month after the end of each accounting periodEg : Due date for period 01/10/06 to 31/12/06 is 31/01/2007
77 FILING OF GST F5 All Tax Returns Must Be Filed By Due Date If No Trading Is Done, a ‘Nil’ Return Is Still Required.
78 FILING OF GST F5 FAILURE TO FILE RETURN OR MAKE INCOMPLETE RETURN: An OffenceComptroller Can Assess Amount of Tax DueNotice of Assessment (Estimated) Will Be Sent to Trader
79 PAYMENT OF TAX DUE DATE MODES OF PAYMENT within 1 month after end of each accounting periodMODES OF PAYMENTGiro or ChequeCross all cheques and make them payable to “Comptroller of Goods and Services Tax”
80 PAYMENT OF TAX If Net Amount Payable <$5, No Payment Is Required If Net Amount Repayable <$5, No Refund Will Be MadeThe Amount Will Not Be Carried Forward
81 REGISTRATION Just A Reminder ... Compulsory Registration Voluntary Registration- must remain registered for at least 2years
82 Registration GST Certificate With effect from 15 Sep 1999, we no longer issue GST registration certificate and you are not required to display at your business premises
83 RegistrationAs a GST registered trader, you must print your GST registration number on your tax invoices, simplified tax invoices and serially printed receipts
84 If You Are Registered As A Sole-Proprietor Registered for GST in your individual nameValue of taxable supplies is the aggregate taxable turnover of all your sole-proprietorship businessesCharge GST on supplies made by all your sole-proprietorship businesses
85 If You Are Registered As A Sole-Proprietor Qn: What if you set up another sole-proprietorship business in future, doyou need to register this new business?Ans: No, because you, as the sole-proprietor,are already registered.
86 If You Are Registered As A Sole-Proprietor You should use the same GST registrationnumber to charge GST with effect from the dateof commencement of new businessWhat you must do:Send in ACRA instant information extract of the new business
87 If You Are Registered As A Partnership Registration is in the name of the respectivefirmsValue of taxable supplies is the aggregate taxable turnover of all partnerships having the same composition of partners
88 If You Are Registered As A Partnership Charge GST on supplies made by all other partnerships with the same composition of partnersQn: What should you do if you set up another partnership business with the same composition of partners?
89 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.
90 CHANGE OF BUSINESS CIRCUMSTANCES Changes involveBusiness name and addressGiro bank account numberDe-registrationTransfer of business as a going concernSo what does change of business circumstances mean? Over here, we have listed some of the changes and they include change of your business address and account numbers.
91 CHANGE OF BUSINESS CIRCUMSTANCES Write in to inform Comptroller within 30 daysDo not delay- Refund could be delayed- Transfer of Business, penalties mayapply for late notificationPlease note that you will need to inform IRAS whenever there is a change of business circumstance. As advised here, you have to inform us promptly as your refund may be affected.
92 CEASE TO MAKE TAXABLE SUPPLIES Notify Comptroller by submitting GST F9 (Application for Cancellation of GST)Within 30 days
93 CEASE TO MAKE TAXABLE SUPPLIES Once your application is approved, GST F8 (Final Goods and Services Tax Return) will be issuedNeed 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
94 TRANSFER OF BUSINESS AS A GOING CONCERN Eg: Business was converted from a partnership to a private limitedNotify the Comptroller 30 days before the date of transfer
95 GST-INCLUSIVE PRICEAny price displays, advertisements, or quotations in respect of goods or services made to the public should be inclusive of GSTFailure to comply with the GST-inclusive price display requirement is an offence-GST legislation requires that a GST-registered business to display, advertise, publish or quote price inclusive of GST.- It is an offence for failure to comply with the above- If your price displays have not been in compliance with the above, you should take immediate steps to rectify your price displays and ensure that they show GST-inclusive prices.- The diagram below is an eg. of GST-inclusive price tag.ABC Co. Pte Ltd$107.00
97 HOW TO COMPLETE GST F5 Include: Box 1: Total value of standard-rated supplies(excluding GST Amount)Include:Sale of goods & services (generally local supplies)Sale of business assetsDeposits received as part paymentSupplies to staff
98 HOW TO COMPLETE GST F5 (excluding GST Amount) Include: Box 1: Total value of standard-rated supplies(excluding GST Amount)Include:Hire of goods to someone elseGift of goods costing > $200Deduct:Credit note issued to customersDebit note received from customers
99 HOW TO COMPLETE GST F5 Box 2: Total value of zero-rated supplies Include:Supplies of goods which are exportedSupplies of international services
100 HOW TO COMPLETE GST F5 Box 3: Total value of exempt supplies Include: Supplies of financial services(4th Schedule)Sale and lease of residential properties
101 HOW TO COMPLETE GST F5 Box 5: Total value of taxable purchases (excluding GST Amount)Include:Standard-rated purchasesImportsZero-rated purchases(Egs: IDD calls, International Freight Charges,Air Tickets)
102 HOW TO COMPLETE GST F5 ...cont’d (taxable purchases) Deduct: Debit note issued to suppliersCredit note received from suppliers
103 HOW TO COMPLETE GST F5 * Not to enter for taxable purchases* Wages & salariesPurchases for private usePurchases from non GST-registered suppliers
104 HOW TO COMPLETE GST F5 * Not to enter for taxable purchases * Purchases and maintenance of motor carsFamily benefitsEmployee medical & insurance expensesClub subscription & entrance fees
105 HOW TO COMPLETE GST F5 Box 7 (input tax) Includes: allowable input tax incurred on your taxable purchasesrefund of GST to touristsbad-debt relief
106 HOW TO COMPLETE GST F5 Input tax errors Eg: Computational Errors Double claiming of input taxA company used a spreadsheet program to prepare input tax claimsThe formula in the spreadsheet was wrong resulting in double claiming of input taxAnother common error made by traders is double claiming of input tax. This may be made in the same accounting period or in another accounting period. In this instance, the trader had used a spreadsheet with a wrong formula, resulting in double claims of input tax. The error was rectified by the filing of an F7 to correct the errors.
107 HOW TO COMPLETE GST F5 Please note: To drop off cents for Boxes 1 to 5 & 9Declare figures in S$, not in foreign currenciesAll boxes must be completed
108 HOW TO COMPLETE GST F5Example: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
109 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)
110 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, GST charged at 0%
111 HOW TO COMPLETE GST F5 Box 1 Standard-rated supplies $15,000 Box 2 Zero-rated supplies $50,000Box 3 Exempt supplies $0Box 4 Total of Box $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
112 GST F7 (Disclosure of Errors in GST Return) Purpose: To disclose errors made in the GST F5But 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
113 ERRORS Is the total of all errors > 5% of total supplies? Do the errors involve GST?NONOInclude the errorsin the next returnNOYESIs the amount of netGST errors > $500?YESYESFile in F7
114 GST F7 (Disclosure of Errors in GST Return) Example 1Errors involve GST (values of supplies and purchases are correct)Qtr 1: Overdeclared by $300Qtr 2: Underdeclared by $200Qtr 3: Overdeclared by $250
115 GST F7 (Disclosure of Errors in GST Return) Net GST error = = $350As the net error is $350 (<$500), no need to file GST F7. Just adjust in Box 7 of current GST F5.
116 GST F7 (Disclosure of Errors in GST Return) Example 2Errors do not involve GSTStandard-rated supplies error = $200 (output tax is correct)Zero-rated supplies error = $10,000Taxable purchases error = $500 (input tax is correct)
117 GST F7 (Disclosure of Errors in GST Return) Total errors = $ , = $10,700Total supplies = $150,000Percentage of error to total supplies= $10,700/$150,000 X 100= 7% (>5%)=> File GST F7 for the quarter the error was made
118 GST F7 (Disclosure of Errors in GST Return) How can I obtain the GST F7?You can:call GST Integrated Phone Service at (Option 4)request through your TaxPortalwrite invisit us personally at our Taxpayer Services Centre (1st floor, Revenue House)– Letter of Authority required
119 VOLUNTARY DISCLOSURETake steps to ensure compliance with GST LegislationFile true and complete returnsRemember: Always do it right the first time
120 VOLUNTARY DISCLOSUREGood 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.
121 Submission of incorrect return Omission/understatement of output tax or overstatement of input tax; orGives any incorrect informationPenalty = Amount of tax undercharged
122 Submission of incorrect return Without reasonable excuse or negligencePenalty = 2 X Amt of tax undercharged; andFine < $5,000; orImprisonment < 3 years; or both
124 COMMON MISCONCEPTIONS Gifts : need not account GSTTrade-in : charge GST on net amountNon-reporting of suppliesOn-charging of suppliesAbsorption of GST
125 COMMON MISCONCEPTIONS Tourist Refund Scheme:Tourist can claim GST based on tax invoices only
126 Misconception No. 1 Gifts : Need not account GST Conditions for accounting GST on gifts :Incurred GST on purchase of goodsCost of gift > $ 200 orCost of gift < $ 200, but 3 or more gifts given to the same person within 3 monthsA lot of traders make the mistake of not charging output tax on gifts.FYI, You will need to charge output tax on gifts if it satisfies the following conditions.Firstly, you must have incurred input tax on the gift, i.e. you have made a purchase from another registered trader.The cost of the gift is > $200. However, if the cost < or = to $200 but 3 or more gifts are given to the same person within 3 months to form a series of gift, then you will be required to account output tax on these gifts.
127 GIFTS >$200 / SERIES OF GIFTS. GST must be accounted on goods given out as Lucky Draw prizes eg. Dinner & Dance lucky draw prizesHampers/Gifts to clientsAlso, please remember that you will need to account output tax for the following items listed here as well.
128 Misconception No. 2 Trade-in : Charge GST on net amount GST must be accounted on the value of the 2 separate suppliesIncorrect to account GST on the net difference onlyGST is a transaction based tax. Thus, for a trade-in, there are actually 2 supplies here. It is wrong to account GST on the net difference only. Let me illustrate this with an example.
129 A Year End Sale Not to Be Missed!!! Fridges are going at an unbeatable priceof $650 only!!Even more incredible news!!Trade in your old fridge for a BrandNew Fridge for only $450!!Unbelievable but true!! So come ondown to our stores now !!!
130 Misconception No. 3 Non-reporting of supplies On-Charging of SuppliesAbsorption of GSTNow we come to the area where traders fail to report their supplies thinking that they need not report them in the first place.
131 ON-CHARGING OF SUPPLIES Reimbursements vs DisbursementsReimbursements - supply attracts GSTDisbursements - do not attract GSTWe will look at the difference between reimbursement and disbursement.To start off, just bear in mind as we go through the illustrations that reimbursements attract GST, while disbursements do not.The place of supply rule holds. For reimbursements to another local company and a related company, you will need to std-rate as usual; but if the reimbursement is to an overseas company, you may be able to standard-rate it depending on the circumstances.
132 DISBURSEMENTS 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 chargeableReimbursement: GST chargeableConfusion arises when determining whether a series of transactions results in a reimbursement (within the scope of GST) or a disbursement (outside the scope of GST) is the fact that both words are often used interchangeably, as though they have the same meaning.
133 GST 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.”
134 WHAT IS A SUPPLY? Section 10(2)(a) of the GST Act: “…includes all forms of supply, but not anything done otherwise than for a consideration”What is important from a GST perspective is to determine whether any money received amounts to consideration for a supply of goods or services. Where a taxpayer purchases goods and then passes them on to someone else, there has likely been a supply made to him and by him, both of which should be subject to GST if made by registered businesses in Singapore.
135 DISBURSEMENTS OR REIMBURSEMENTS 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.Onward supply3rd party(Supplier)Co ACo B(Main Contractor)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.Reimbursement is in essence 2 supplies. One from supplier to Co A and another from Co A to, say, the main contractor (MC). If Co A seeks reimbursement from the main contractor (MC), GST is chargeable because it is treated as an onward supply from A to the MC.Disbursement: No Supply, no GST chargeableReimbursement: A supply exists and GST chargeable
136 ABSORPTION OF GSTI 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 priceEg : selling price=$100GST = 7/107 x $100 = $6.54Another commonly asked question is this:....Please note that even though you claim that you are absorbing GST, in actual fact, there is still GST accountable to IRAS. The amount is worked out as follows:
137 Misconception No. 4 Tourist 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
138 TOURIST REFUND SCHEME Global Refund Singapore Pte Ltd : 6225 6238 Premier Tax Free (Singapore) Pte Ltd:Singapore Retailer Association :
140 APPLICATION EXERCISE Answers 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>
141 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>
142 CONTENTS Penalties & Recovery Actions Slide 3 - Change of business circumstances- Common misconceptions- Common errors- Application exercise- Q & A session- Feedback
143 PENALTIES ON NON / LATE SUBMISSION OF GST F5 $ PER COMPLETED MONTH( MAXIMUM $10,000 FOR EACH RETURN )Eg: GST F5 for the quarter ended 31 Dec 2006due on 31 Jan 2007.GST F5 filed on 14 May 2007No. of months late = 3 (Feb to Apr)Amount of penalties = $ (3 x $200)
144 PENALTIES ON NON / LATE SUBMISSION OF GST F5 FINE NOT EXCEEDING $5,000 AND IN DEFAULT OF PAYMENT TO IMPRISONMENT NOT EXCEEDING 6 MONTHSDIRECTOR’S LIABILITY(S74(1) OF THE GST ACT)
145 USEFUL INFORMATION RE: GST F5 ISSUANCE OF GST F5NOTIFICATION OF CHANGE OF ADDRESSCONFIRMATION OF RETURN RECEIVED GST HELPLINE:
146 PENALTIES ON NON / LATE PAYMENT OF GST 5 % ON OUTSTANDING TAXADDITIONAL PENALTY OF 2% OF TAX OUTSTANDING ADDED FOR EACH COMPLETED MONTH UP TO MAXIMUM 50% OF TAX OUTSTANDING
147 RECOVERY ACTIONS NON-FILING OF GST RETURN ISSUE OF DEFAULT ASSESSMENTIMPOSE PENALTIES ON NON / LATE SUBMISSION OF GST F5ISSUE SUMMONS TO ATTEND COURT
148 RECOVERY ACTIONS NON PAYMENT OF TAX IMPOSE PENALTIES ON TAX OUTSTANDINGAPPOINT OTHER PARTY AS AGENT eg. BANK, TENANTSTOP INDIVIDUAL FROM LEAVING THE COUNTRYTAKE LEGAL ACTIONS