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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?

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Presentation on theme: "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?"— Presentation transcript:

1 INLAND REVENUE AUTHORITY OF SINGAPORE

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3 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

4 CONTENTS Overview Of GST System How GST works Concepts Of GST Scope Of Tax Exports Tax Invoice Purchases Obligations GST F5 & F7

5 CONTENTS Common Misconceptions Application Exercise Penalties & Recovery Actions Q & A session Feedback

6 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)

7 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

8 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

9 HOW GST WORKS Basic GST Process (Output Tax) GST collected from customers

10 HOW GST WORKS Basic GST Process (Output Tax) (Input Tax) GST collected less GST paid on from customers business purchases

11 HOW GST WORKS Basic GST Process (Output Tax) (Input Tax) GST collected less GST paid on from customers business purchases equals Net GST

12 Basic GST Process Net GST + - Payable to Refundable from Comptroller Comptroller HOW GST WORKS

13 SELLING PRICEGST Payable Import Value= $ 5,000GST paid on import = $350 Manufacturers Price= $10,000 Manufacturer GST Collected = $700 GST Amount= $ 700Less: GST Paid = $350 Selling Price= $10,700GST Payable = $350 Retailers Price= $20,000GST Collected = $1,400 GST Amount= $ 1,400 Retailer Less: GST Paid = $ 700 Selling Price= $21,400 GST Payable = $ 700 Consumer pays= $21,400Total GST Paid = $1,400 Consumer

14 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?

15 Section 8 of GST Act GST will be charged on any supply of goods or services if it is : i)made in Singapore ii)a taxable supply iii)made by taxable person iv)in the course or furtherance of business SCOPE OF TAX SCOPE OF TAX

16 SCOPE OF TAX Supply includes all forms of supply done for a consideration. Forms of supply can be either goods or services

17 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

18 TAXABLE SUPPLY - A supply of goods or services made in Singapore other than an exempt supply - 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 GST under the Act

20 Non-Taxable Taxable TYPES OF SUPPLY Out-of-Scope Exempt

21 Non-Taxable Taxable Out-of-Scope Exempt Zero-rated (0%) Standard-rated (7%) TYPES OF SUPPLY

22 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

23 Goods are shipped from China to U.S.A. without coming into Spore Supply is out-of-scope

24 Zero-rated Supply (0% GST) Export of Goods International Services Standard-rated Supply (7% GST) All Others Eg: Sale of Fixed Assets TAXABLE SUPPLY

25 SALE OF FIXED ASSETS GST must be charged on the sale of Fixed Assets Eg : Non residential properties, furniture, computers, etc GST to be accounted on Selling Price of Asset

26 TAXABLE SUPPLY GST is a transaction based tax Need to review all transactions including those not in the normal course of business

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31 GOODS Time of Supply for Goods Goods are removed or made available; Tax invoice issued; or Payment received whichever is the earliest Subject to 14-day rule WHEN SHOULD YOU ACCOUNT FOR GST?

32 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?

33 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 : ? 14-day Rule

34 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

35 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?

36 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?

37 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?

38 Consideration not in money Value of supply = open market value Trade/cash discount given Value of supply = discounted price

39 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.

40 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

41 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

42 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

43 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

44 IMPORTANCE OF TAX INVOICE primary document for input tax claim documentary evidence that GST has been charged on the standard-rated supply

45 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

46 WHEN NOT TO ISSUE A TAX INVOICE? No need to issue tax invoices for: zero-rated supplies exempt supplies deemed supplies

47 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

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 separately total amount payable, including tax breakdown of exempt, zero-rated or other supply, stating separately the gross amount payable in respect of each

49 SIMPLIFIED TAX INVOICE When to Issue? amount payable including tax <$1,000 only for standard-rated supplies Particulars 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

50 PURCHASES 1. Claiming of input tax 2. Imports 3. Disallowed Input Tax Claims 4. Conditions for Pre-registration Input Tax Claims

51 CLAIMING OF INPUT TAX Tax Invoice Evidence for claiming GST incurred on business purchases Tax invoice addressed to business name ABC Co.

52 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

53 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

54 IMPORTS Importer - Person who is entitled to claim GST paid on imports GST payment permit - Evidence to support input tax claims

55 DISALLOWED INPUT TAX CLAIMS (REG 26 & 27) a) Club Subscription Fee b) Medical and Accident Insurance Premium c) Medical Expenses d) Family Benefits e) Cost and Running Expenses of Motor Cars

56 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

57 PRE-REGISTRATION CLAIMS GST registration date : 01/06/07 Expenses 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

58 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

59 PRE-REGISTRATION CLAIMS GST registration date : 01/06/07 Expenses Incurred : Invoice Date Description AmountClaimable? 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

60 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

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

63 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 handbooks Find guides on GST form filling!

64 CONTENTS Obligations GST F5 & F7 Common Misconceptions Application Exercise

65 OBLIGATIONS 1. Record Keeping 2. Filing Of GST F5 3. Payment Of Tax 4. Registration 5. Change Of Business Circumstances 6. GST - Inclusive Price

66 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

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 supporting change in consideration

68 RECORD KEEPING Examples 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

69 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

70 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

71 RECORD KEEPING How do you keep records and accounts? no specific guidelines complete and up-to-date figures in GST Returns can be easily verified

72 RECORD KEEPING From 1 January 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

73 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

74 RECORD KEEPING Failure 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

75 FILING OF GST F5 FILING One GST F5 for One Prescribed Accounting Period YOU MUST NOT USE: Forms issued for Other Periods

76 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

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 Offence Comptroller Can Assess Amount of Tax Due Notice of Assessment (Estimated) Will Be Sent to Trader

79 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

80 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

81 REGISTRATION Just A Reminder... Compulsory Registration Voluntary Registration - must remain registered for at least 2 years

82 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

83 Registration As 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 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

85 If You Are Registered As A Sole- Proprietor Qn: 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.

86 If You Are Registered As A Sole- Proprietor You should use the same GST registration number to charge GST with effect from the date of commencement of new business What 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 respective firms Value 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 partners Qn: 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 involve Business name and address Giro bank account number De-registration Transfer of business as a going concern

91 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

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 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

94 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

95 GST-INCLUSIVE PRICE ABC Co. Pte Ltd $ Any price displays, advertisements, or quotations in respect of goods or services made to the public should be inclusive of GST Any price displays, advertisements, or quotations in respect of goods or services made to the public should be inclusive of GST Failure to comply with the GST-inclusive price display requirement is an offence Failure to comply with the GST-inclusive price display requirement is an offence

96 GST RETURNS How To Complete : 1. GST F5 2. GST F7

97 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

98 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

99 HOW TO COMPLETE GST F5 Box 2: Total value of zero-rated supplies Include: Supplies of goods which are exported Supplies 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 purchases Imports Zero-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 suppliers Credit note received from suppliers

103 HOW TO COMPLETE GST F5 * Not to enter for taxable purchases* Wages & salaries Purchases for private use Purchases from non GST-registered suppliers

104 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

105 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

106 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

107 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

108 HOW TO COMPLETE GST F5 Example: ABC company has the following business transactions for one accounting period: 1) Imports - $20,000 2) Local sale - $10,000 3) Sale of fixed asset - $5,000 4) Local purchase - $8,000 5) 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 - $20,000GST - $1,400 (Box 7) 2) Local sale - $10,000GST - $700 (Box 6) 3) Fixed asset - $5,000GST - $350 (Box 6) 4) Local purchases - $8,000GST - $560 (Box 7) 5) Export sales - $50,000 GST charged at 0%

111 HOW TO COMPLETE GST F5 Box 1 Standard-rated supplies$15,000 Box 2 Zero-rated supplies$50,000 Box 3 Exempt supplies$0 Box 4 Total of Box 1+2+3$65,000 Box 5 Taxable purchases$28,000 Box 6 Output tax$1, Box 7 Input tax$1, Box 8 Net GST to be claimed$ Box 9 Total imports under MES$0

112 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

113 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 YES

114 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

115 GST F7 (Disclosure of Errors in GST Return) Net GST error = = $350 As 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 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)

117 GST F7 (Disclosure of Errors in GST Return) Total errors = $ , = $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

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 TaxPortal write in visit us personally at our Taxpayer Services Centre (1st floor, Revenue House) – Letter of Authority required

119 VOLUNTARY DISCLOSURE Take steps to ensure compliance with GST Legislation File true and complete returns Remember: Always do it right the first time

120 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.

121 Submission of incorrect return Omission/understatement of output tax or overstatement of input tax; or Gives any incorrect information Penalty = Amount of tax undercharged

122 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

123 C OMMON MISCONCEPTIONS

124 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

125 COMMON MISCONCEPTIONS 4. 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 goods Cost of gift > $ 200 or Cost of gift < $ 200, but 3 or more gifts given to the same person within 3 months

127 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

128 Misconception No. 2 Trade-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

129 A Year End Sale Not to Be Missed!!! Fridges are going at an unbeatable price of $650 only!! Even more incredible news!! Trade in your old fridge for a Brand New Fridge for only $450!! Unbelievable but true!! So come on down to our stores now !!!

130 Misconception No. 3 Non-reporting of supplies On-Charging of Supplies Absorption of GST

131 ON-CHARGING OF SUPPLIES Reimbursements vs Disbursements Reimbursements - supply attracts GST Disbursements - do not attract GST

132 DISBURSEMENTS OR REIMBURSEMENTS 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 chargeable Reimbursement: GST chargeable

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? …includes all forms of supply, but not anything done otherwise than for a consideration Section 10(2)(a) of the GST Act:

135 Contract for gds and svcs is between Co A & 3 rd party. Tax Invoice is issued to Co A. Co A is legally responsible to pay 3 rd party for the gds & svcs. DISBURSEMENTS OR REIMBURSEMENTS 3 rd 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 3 rd party. Tax invoice is issued to Co B. Co B is legally responsible to pay 3 rd party for the goods and services. Onward supply Reimbursement: A supply exists and GST chargeable

136 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=$100 GST = 7/107 x $100 = $6.54

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 Global Refund Singapore Pte Ltd: Premier Tax Free (Singapore) Pte Ltd : Singapore Retailer Association: TOURIST REFUND SCHEME

139 Application Exercise

140 APPLICATION EXERCISE Answers to Exercise Supplies : 1) Export sales : zero-rated supply 2) Local sales : standard-rated supply 3) Disposal of business asset 4) Interest income : 5) Value of gift >$200 : Deemed supply 6) Payment of wages and salaries

141 APPLICATION EXERCISE Answers to Exercise Purchases/ Payment : 7) Taxable purchase 8) Taxable purchase 9) Non-taxable purchase 10) Not allowable under Regulation 26

142 CONTENTS Penalties & Recovery Actions

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 2006 due on 31 Jan GST F5 filed on 14 May 2007 No. 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 MONTHS DIRECTOR S LIABILITY (S74(1) OF THE GST ACT)

145 USEFUL INFORMATION RE: GST F5 ISSUANCE OF GST F5 NOTIFICATION OF CHANGE OF ADDRESS CONFIRMATION OF RETURN RECEIVED GST HELPLINE:

146 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

147 RECOVERY ACTIONS NON-FILING OF GST RETURN ISSUE OF DEFAULT ASSESSMENT IMPOSE PENALTIES ON NON / LATE SUBMISSION OF GST F5 ISSUE SUMMONS TO ATTEND COURT

148 RECOVERY ACTIONS NON 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

149 Q & A Session

150 Last update on 17 April 2007


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