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“Introduction to GST” GOODS AND SERVICES TAX (GST) Notes to Speaker 1:

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Presentation on theme: "“Introduction to GST” GOODS AND SERVICES TAX (GST) Notes to Speaker 1:"— Presentation transcript:

1 “Introduction to GST” GOODS AND SERVICES TAX (GST) Notes to Speaker 1:
Remind no food and drinks allowed in the auditorium. Get attendees to turn off their mobile phone or to switch them to silent mode. Check with attendees if they have all of the below documents: - Seminar Notes - Avoid costly GST errors - Application form for Interbank GIRO for GST - Feedback form (to be submitted at the end of the seminar) - Q&A slip (to be dropped into the box outside the auditorium during the 15 mins break)

2 For more information, please visit:
E-LEARNING “Introduction to GST” course can now be done online! e-Learning mode is strongly encouraged over seminar Benefits include: On-demand availability: accessible anytime and anywhere at your convenience Self-pacing: control over the pace of learning and modules can be reviewed as often as needed Interactivity: higher knowledge retention through active learning and use of examples and interactive exercises etc. Notes to Speaker 1: Urge attendees to share the above information with their fellow colleagues/friends. Inform that the e-Learning course has 8 modules and participants are allowed to attempt the 8 modules on separate occasions and return to any modules for revision as and when required. Stress that ONLY businesses that have voluntarily registered for GST MUST complete the “Introduction to GST” course within 3 months from their effective date of GST registration. They are strongly encouraged to complete the course via e-Learning. Those voluntarily registered businesses that choose to complete the course via e-Learning are required to submit their particulars to IRAS (i.e. business name, GSTN, name and designation of the person completing the course etc.) upon passing the quiz at the end of the course. Attendees of the seminar may also wish to attempt the quiz found in the e-Learning course as a gauge of how well they have understood the content of the seminar. For more information, please visit: > GST > For GST-registered businesses > GST Course "Introduction to GST" (e-Learning/Seminar) 

3 COURSE OUTLINE GST and My Responsibilities Charging GST on Sales
Accounting for GST on Other Transactions Claiming GST on Business Purchases and Imports Price Display, Invoicing and Record-keeping BREAK 6. e-Filing GST returns and Correcting Mistakes 7. Penalties and Recovery Actions 8. Tips on Compliance 9. Notifying of Changes to Business and Cancelling GST Registration 10. Where to Get Help Useful Information Q&A

4 1. GST and My Responsibilities
What is GST? How does GST Work? What are the Responsibilities of a GST-registered Business? Relevant e-Tax Guides: “GST: General Guide For Businesses” “Do I Need to Register?”

5 1. GST and My Responsibilities
What is GST? Tax on domestic consumption of goods and services and importation of goods Paid when: - Goods or services are purchased from GST- registered businesses - Goods are imported into Singapore (collected by Singapore Customs at point of importation) Self-assessed tax Notes to Speaker 1: Self-assessed tax - Responsibility of businesses/individual to come forward to register for GST when their turnover in the current and preceding 3 quarters exceed $1m or when they foresee that their turnover in the next 12 months will exceed $1m.

6 1. GST and My Responsibilities
How does GST Work? equals Net GST GST paid on business purchases (Input tax) less GST on supply of goods & services (Output tax) - Notes to Speaker 1: Verbally explain the diagram. How Output tax – Input tax = Net GST (payable/refundable). + Payable to Comptroller Refundable from Comptroller

7 1. GST and My Responsibilities
GST-Registered Retailer $700 + $49 (7% GST) Output tax = $49 Input tax = $35 Net GST payable = $14 End-consumer $ $70 (7% GST) Output tax = $70 Input tax = $49 Net GST payable = $21 GST-Registered Wholesaler $500 + $35 (7% GST) Import GST = $35 Overseas Supplier Notes to Speaker 1: GST is a tax on domestic consumption and is borne by the final consumer. This is illustrated by the diagram. Suppose that a GST-registered wholesaler imports a TV set worth $500. Import GST of $35 is paid to SC. This wholesaler then sells the TV to a GST-registered retailer at $700. GST of $49 is charged to the retailer. The wholesaler will account for $49 as output tax to the Comptroller of GST, and claim the $35 incurred for their import. He pays a net GST of $14. The retailer subsequently sells the TV to an end-consumer at $1000. $70 of GST is charged. He accounts for $70 as his output tax, and claims the $49 charged to him by the wholesaler as his input tax. He pays a net GST amount of $21 to the Comptroller. Notice that the total GST paid to the Comptroller ($35 + $14 + $21 = $70) is exactly what the end-consumer pays. This credit mechanism where GST-registered businesses claim input tax (i.e. GST incurred on their purchase) and account for output tax (i.e. GST collected on their sales) ensures that only the value adding is taxed at each stage of the supply chain.

8 1. GST and My Responsibilities
What are the Responsibilities of a GST-registered Business? A GST-registered business must: Submit returns and pay tax in a timely manner Submit accurate GST returns Maintain listings and keep business and accounting records for 5 years Assist in GST audit Display prices with GST Reflect GST registration number on all tax invoices and receipts Inform IRAS of changes to the business Account for GST on business assets held at point of de-registration In the subsequent parts of this course, you will learn how to fulfill these 8 basic responsibilities.

9 2. Charging GST on Sales Value of Supply Subject to GST Absorbing GST
Scope of Tax Value of Supply Subject to GST Absorbing GST Accounting for GST Bad Debt Relief Claim Relevant e-Tax Guides: “GST: General Guide For Businesses” “GST: Time of Supply Rules” “GST: A Guide on Export” “Do I Need to Register?” “Accounting for GST Absorbed by Businesses”

10 2. Charging GST on Sales Scope of Tax
GST-registered businesses should charge GST on any supply of goods or services if it is : i) made in Singapore ii) a taxable supply iii) made by a taxable person iv) in the course or furtherance of the business

11 2. Charging GST on Sales Goods or Services? Goods Services
Possessions obtained in exchange for money or in kind Generally tangible objects Could be new or second-hand Example: Furniture Utilities (e.g. water, electricity) and space for rent/ sale are treated as goods for GST purposes. Anything that is not goods Performance of duty or work for another person Generally intangible Example: Hairdressing Service

12 2. Charging GST on Sales i) Is the supply made in Singapore?
Goods are supplied in Singapore if the goods are in Singapore or from Singapore at the time of supply Services are supplied in Singapore if the supplier belongs in Singapore Notes to Speaker 1: Elaborate that a company usually belongs in Singapore if it is incorporated in Singapore.

13 2. Charging GST on Sales ii) Is the supply taxable?
Taxable supply refers to the supply of goods or services made in Singapore, other than an exempt supply and out-of-scope supply. Examples of types of supplies TAXABLE SUPPLIES NON-TAXABLE SUPPLIES 1. Standard-Rated Supply (7% GST) Local sales of goods & services Sale of Capital Assets 1. Exempt Supply Sale and Lease of Residential Properties Financial Services Local Sale of Investment Precious Metals (IPM) Zero-Rated Supply (0% GST) Export of Goods International Services Out-of-Scope Supply Third Country Sales (Sales outside Singapore) Transhipments Disbursements Notes to Speaker 1: - Only standard-rated and zero-rated supplies are taxable supplies. Explain a little if services falls under international services S21(3), it can be zero-rated List of financial services can be found under 4th Schedule eg. Interest income received from local banks Elaborate on Out-of-Scope supplies: No GST is charged on such supplies as they are outside the scope of the GST law. Here are some examples of Out-of-Scope supplies. Example of 3rd ctry sale – Goods can be sold to a local customer but the goods do not enter Singapore. The goods are delivered directly from a ctry outside Sp to another ctry outside Sp. Example of transshipment – Importing of goods into Free-Trade Zone (FTZ) and subsequently exporting them out from FTZ. Example of disbursement – Payment arrangement. Purely paying on behalf of another company.

14 2. Charging GST on Sales iii) Who is a taxable person?
A person that is GST-registered or is required to be registered for GST under the GST Act. Notes to Speaker 1: Please provide connection from this slide to the next few slides on GST registration liability. The next few slides explains if a person is required to be registered for GST (the person’s liability to be GST-registered) and also registration liability rules to look out for if the person is a SP or a PP.

15 2. Charging GST on Sales GST registration liability Registering for GST is compulsory when: Your taxable turnover for the current quarter and the past 3 quarters is more than $1 million (unless you are certain that your turnover in the next 12 months will not exceed $1 million); or You have started or intend to start making sales, and you can reasonably expect your taxable turnover to exceed S$1 million in the next 12 months Otherwise, the business need not register for GST, unless it chooses to do so voluntarily Additional responsibilities for voluntarily registered businesses remain GST-registered for at least 2 years make taxable supplies within 2 years if you have not started making taxable supplies at the point of registration The Comptroller may also impose other conditions and may cancel your GST registration if any of the conditions are not met. Notes to Speaker 1: Registering for GST is compulsory when the turnover of your business is more than $1 million in the current quarter and past 3 quarters. (Instead of being more than $1 million for the past 12 months) A “Quarter” under the GST Act refers to quarters ending Mar, June, Sep and Dec. "Taxable turnover" is the total value of all taxable supplies made in Singapore (excluding GST) in the course or furtherance of business. This includes the value of all standard-rated and zero-rated supplies but it excludes exempt supplies, out-of-scope supplies and the sale of capital assets. For the purpose of determining your liability for GST registration, the value of exempt supplies that are international services under section 21(3) of the GST Act should also be excluded from your total taxable supplies. The other conditions for voluntary registration include being under compulsory GIRO and having to complete an e-learning module before and after registration.

16 2. Charging GST on Sales GST registration liability - Rules for Sole-proprietorship (Owned by an Individual) Combine the turnover of all SPship businesses to ascertain the liability to register GST registration is in the name of the SP, not the SPship business (i.e. Mr Tan owns ABC Company, GST registration will be in the name of Mr Tan) All SPship businesses under the SP’s name will be GST-registered. This includes any SPship business which you may set-up in the future SP should use the same GST registration number to charge GST for all existing SPship businesses and any newly set-up SPship business Notify IRAS of any new SPship business by sending in its ACRA Business Profile Notes to Speaker 1: SP can be a corporate i.e. Pte Ltd Company, or an individual. Reporting will be in the same GST return

17 2. Charging GST on Sales GST registration liability - Rules for Sole-proprietorship (example) You are a sole proprietor with 2 sole-proprietorship businesses (Business A and B) and you drive a taxi on a part-time basis.  In the past 12 months, the turnover of Business A is $500,000,  the turnover of Business B is $490,000 and the income derived from your taxi driving is $30,000. Notes to Speaker 1: SP can be a corporate i.e. Pte Ltd Company, or an individual. Reporting will be in the same GST return Total Turnover/Income = $500,000 + $490,000 + $30,000 = $1,020,000 As the combined turnover (including the income from the taxi driving) has exceeded $1 million, you must register for GST immediately if you can reasonably expect your total turnover to be more than $1 million for the next 12 months.

18 2. Charging GST on Sales GST registration liability - Rules for Partnership (PP) GST registration will be in the name of the respective PP businesses Once your PP is GST-registered, you are required to account for output tax on all taxable supplies in connection with any separate businesses comprising of the same partners. Notes to Speaker 1: Link this slide to the next by saying that you will now return to explain the fourth condition stated under scope of tax, which is “What is meant by in the course or furtherance of the business?”.

19 2. Charging GST on Sales GST registration liability - Rules for Partnership (example) You and Mary are partners and have 2 partnership businesses (Business C and D). You also have another partnership business (Business E) with John. In the past 12 months, the turnover of Business C is $200,000, the turnover of Business D is $300,000 and the turnover for Business E is $600,000. Notes to Speaker 1: In the example, we need to combine the turnover for all partnership businesses with the same composition of partners. You would separately compute the turnover for the business (i.e. Business E) owned by you and John for GST registration purpose. Hence, to calculate the turnover for registration liability, it would be $200,000+$300,000 = $500,000. As the combined turnover is $500,000, you need not register for GST if you can reasonably expect your business turnover to be less than $1 million for the next 12 months. However, you may wish to apply for voluntary GST registration. Link this slide to the next by saying that you will now return to explain the fourth condition stated under scope of tax, which is “What is meant by in the course or furtherance of the business?”. Business Turnover (partnership with Mary) = $200,000 + $300,000 = $500,000 As the combined turnover for all partnership businesses with the same composition of partners is $500,000, you need not register for GST if you can reasonably expect your business turnover to be less than $1 million for the next 12 months. However, you may wish to apply for voluntary GST registration.

20 2. Charging GST on Sales iv) What is meant by in course or furtherance of the business? Activities carried out in connection to the business either directly (e.g. sales of trading stocks) or incidentally (e.g. recovery of expenses from a related company).

21 Standard-Rated (7% GST)
APPLICATION EXERCISE Supplies Standard-Rated (7% GST) Zero-Rated (0% GST) Exempt Out-of-scope a) Sale of $400,000 worth of goods sent to a local customer which he exports to Japan. b) Deposit of $35,000 in a local bank, which yielded an interest of $1,500. c) Deposit of $35,000 in an overseas bank, which yielded an interest of $1,500. Notes to Speaker 1: a) Emphasize on the portion that the goods is delivered locally and explain why it cannot be zero-rated because there is no control over the export arrangement and specifically disallowed in e-Tax Guide “A Guide on Exports”. b) Explain the difference between Scenario b) and c). c) Generally, interest income received is an exempt supply under the Fourth Schedule of the GST Act. However, financial services that are also international services under Section 21(3) of the GST Act would be treated as zero-rated supplies instead of exempt supplies. Therefore, interest income received from overseas entities is treated as a zero-rated supply. It is to be reported in Box 2 of the GST F5 return.

22 In course or furtherance of business?
APPLICATION EXERCISE Scenarios Taxable Supply? Made by taxable person? In course or furtherance of business? Charge GST? d) A GST-registered art dealer bought a painting in London, sells and directly sends it to his customer in Japan. e) A GST-registered art dealer imported a painting from London, sells and exports it to his customer in Japan. f) A GST-registered sole-proprietor receives income (fares) from part time taxi-driving. N (out-of-scope) N Y Y Y (0%) Y Y Y Notes to Speaker 1: For Scenario d), point out that it’s a 3rd ctry sale. For Scenario f), emphasize that for sole-proprietors, GST is registered in their name and not their sole-proprietorship. Y (7%) Y Y Y

23 APPLICATION EXERCISE Scenarios Taxable Supply? Made by taxable person?
In course or furtherance of business? Charge GST? g) A non-GST registered developer constructs and sells solely residential properties. h) A GST-registered developer develops and sells residential and commercial properties in a mixed development project in Singapore. i) A GST-registered developer develops and sells commercial properties outside Singapore. N (exempt) N N Y Y (7% - commercial) (Exempt - residential) Y (Commercial) Y Y N (out-of-scope) N Y Y

24 2. Charging GST on Sales Value of Supply Subject to GST
Example a) Trade discount Net discounted price I give a 10% discount as a sales promotion. GST will be chargeable on the net discounted price. Note: This clause should be clearly stated in the invoice.

25 Open Market Value (OMV) of goods
2. Charging GST on Sales Value of Supply Example b) Transactions with related parties Open Market Value (OMV) of goods Co. A (GST-registered), sold the company’s furniture (market value $5,000) to one of its directors at $800. Value of supply = $5,000 GST = $5,000 x 7%

26 2. Charging GST on Sales Absorbing GST
To maintain competitiveness or as a form of goodwill, you may choose to ‘absorb’ the GST payable by your customer The sum of money received from your customer will be treated as inclusive of GST The GST to be accounted for is based on the tax fraction of 7/107 of the consideration received Example: You sell a good at $100. If you choose to absorb the GST, $100 is treated as inclusive of GST. Value of Supply = $100 X 100/107 = $93.46 GST = $100 X 7/107 = $6.54

27 BASIC TAX POINT & 14-DAY RULE NOW REMOVED
2. Charging GST on Sales Accounting for GST In general, you should account for GST at the earlier of the following events: Invoice issued; or Payment received For more information, you may refer to the e-Tax Guide “GST: Time of Supply Rules”. BASIC TAX POINT & 14-DAY RULE NOW REMOVED Notes to Speaker 1: With effect from 01 Jan 11, GST rules for TOS is amended to be in line with commercial practices, to help businesses comply with the rules easily. The basic tax point (i.e. goods removed/made available or services performed), along with the 14-day rule is now removed. Take note that any invoice issued that serves as a bill of payment will be a trigger point rather than a tax invoice. Explain what 14-day rule is? It is an exception to the general time of supply rule. I.e. If a tax invoice is issued within 14 days from the day when the goods are removed/made available or services performed and no payment has been made, GST should be accounted based on the tax invoice date. Note: Prior to 1 January 2011, the general time of supply rule is the earliest of the following events: Goods removed/made available or Services performed; (“Basic Tax Point”) Tax invoice issued (subject to 14-day rule); or Payment received

28 APPLICATION EXERCISE Total value of goods sold = $11,000
Invoiced for $11,000 and received part-payment of $5,000 01/01/12 Received remaining payment of $6,000 01/02/12 Goods removed (Value = $11,000) 31/01/12 Notes to Speaker 1: With the removal of the basic tax point from 01 Jan 2012, goods removed on 01 Jan 2012 will not trigger the TOS. TOS for $11,000 is triggered on 31 Jan 2012 when inv is issued. This is the earlier event. Account for GST on: 31/01/12 (on $11,000)

29 2. Charging GST on Sales Bad Debt Relief Claim
A bad debt situation occurs when money owed cannot be recovered. Bad debt relief claim can be made on output tax that was previously accounted for and paid to IRAS if you meet the conditions below: Conditions 1 I have supplied goods or services for a consideration in money and have accounted for and paid GST on the supply. 2 I have written off the whole or any part of the consideration for the supply as a bad debt in my accounts. 3 A period of 12 months beginning with the date of supply has elapsed or the debtor has become insolvent before the period of 12 months has elapsed. 4 I have taken reasonable steps to recover the debts. Please complete the "Self-review of Eligibility to Claim Bad Debt Relief" form (www.iras.gov.sg> Quick links> Forms>GST) before making the claim in your current GST return. Do not submit the form to IRAS unless requested.

30 3. Accounting for GST on Other Transactions
Giving Goods and Services for Free Fringe Benefits to Staff Recovery of Expenses Sale of Business/Capital Assets Trade-in Transaction Notes to Speaker 1: GST is a transaction-based tax. Apart from your normal business sales, you may have other occasional transactions that are done in the course of your business. Relevant e-Tax Guides: “GST: General Guide for Businesses” “Fringe Benefit” “Use of Business Premises By Third Party for Free” “GST: Guide on Reimbursement and Disbursement of Expenses”

31 3. Accounting for GST on Other Transactions
Giving Goods and Services for Free Giving Services for Free No output tax needs to be accounted for as there is no supply Giving Goods for Free (i.e. Free Gifts) Prior to 1 Oct 2012 Deemed as supply of goods Output tax to be accounted for based on the OMV of goods in the following situations: GST was incurred on purchase of goods; Cost of gift > $200; or Cost of gift ≤ $200, but 3 or more gifts were given to the same person within 3 months From 1 Oct 2012 You only need to account for output tax if the cost of each gift exceeds $200; and If input tax on those goods has been allowed to you. Notes to Speaker 1: Prior to 1 Oct 2012 Point out that should more than one gift be presented together on a single occasion, the goods presented will be considered as a single gift. Example Gift hampers given to regular customers during Chinese New Year or Lucky draw prizes given to staff during Dinner & Dance function. With effect from 1 Oct 2012 The series of gifts condition has been removed. Hence, you no longer have to track the number of gifts given to a person. You only need to account for output tax if the cost of each gift exceeds $200;and You are required to account for output tax only if input tax on those goods has been allowed to you. Hence, if you choose not to claim the GST incurred on those goods, you need not account for output tax when you subsequently give the goods away for free. You purchased a sofa from a GST-registered supplier for $1,070 (inclusive of GST) and chose not to claim input tax of $70 on the purchase. Although the gift costs more than $200, you are not required to account for the GST of $70 (7% of $1,000) to IRAS because you did not claim input tax on your purchase previously.

32 3. Accounting for GST on Other Transactions
Fringe Benefits to Staff Prior to 1 Oct 2012 Goods and services given free to all employees Output tax to be accounted for on goods given free except in the following situations: Cost of gift ≤ $200 and it does not form a series of 3 or more gifts (regardless of value) given to the same person within 3 months; It is a free supply of food or accommodation Output tax to be accounted for if GST was incurred on the purchase With effect from 1 Oct 2012 Output tax to be accounted for on goods given free except in the following situations: A free supply of food or accommodation; Gifts of value not more than $200 each; or Gifts for which no credit for input tax has been allowed on its purchase. Notes to Speaker 1: With effect from 1 Oct 2012 The same new deeming conditions are applicable for fringe benefits given to staff Example Company allows expatriate employee to stay in furnished apartment and incurs GST on utilities and furnishings. The company has to deem a supply (as made to the employee) and account for output tax based on the cost of the utilities and furnishing since these are considered as a supply of goods given for free.

33 3. Accounting for GST on Other Transactions
Recovery of Expenses Prior to 31 May 2013 A recovery of expense is considered as a separate supply for GST purposes (i.e. a reimbursement) and hence, subject to GST, as long as it does not meet the following conditions for disbursements: Conditions for disbursements The other party is responsible for paying the supplier; The other party knows that the goods or services would be provided by that supplier; The other party authorised you to make the payment on his behalf; The other party is the recipient of the goods or services; The payment is separately itemised when you invoice the other party; You recover only the exact amount paid to the supplier; and The goods or services paid for are clearly additional to the supplies you make to the other party. Notes to Speaker 1: Prior to 31 May 2013 A recovery of expense is considered as a separate supply for GST purposes (i.e. a reimbursement) and hence, subject to GST, as long as it does not meet the following conditions for disbursements: Conditions for disbursements The other party is responsible for paying the supplier; The other party knows that the goods or services would be provided by that supplier; The other party authorised you to make the payment on his behalf; The other party is the recipient of the goods or services; The payment is separately itemised when you invoice the other party; You recover only the exact amount paid to the supplier; and The goods or services paid for are clearly additional to the supplies you make to the other party.

34 3. Accounting for GST on Other Transactions
Recovery of Expenses With effect from 31 May 2013 GST treatment for any recovery of expenses will be as follows: If you incur the expenses as a principal If you pay the expenses as an agent The recovery of expenses is a reimbursement a disbursement GST treatment The recovery of the expenses from another party may amount to a supply and may be subject to GST or exempt from GST, as the case may be. The recovery of expenses does not constitute a supply and hence will not be subject to GST. Input tax claim You are entitled to claim input tax incurred on goods or services procured by you if the subsequent recovery of such expenses constitute a taxable supply. You are not entitled to any input tax claim since the goods or services are not supplied to you but to your principal. Notes to Speaker 1: With effect from 31 May 2013 GST treatment for any recovery of expenses will depend on whether you incur the expenses as a principal or as an agent.

35 3. Accounting for GST on Other Transactions
Sale of Business/Capital Assets GST-registered businesses must account for GST on all taxable supplies made GST is chargeable on the sale of business/capital asset though it is not considered the main business activity For example, sale of office equipment, factory or old furniture is subject to GST

36 3. Accounting for GST on Other Transactions
Trade-in Transaction Treated as 2 separate supplies for GST purpose GST must be accounted for on the value of the 2 separate supplies Incorrect to account for GST on the net difference only Notes to Speaker 1: Trade-in transactions are transactions where you exchange your goods or sell them at lower prices in return for other goods. For GST purposes, 2 separate supplies take place in such transactions. GST must be accounted on the value of the 2 supplies. It is incorrect to account GST on the net difference only. As mentioned earlier, the value of supply is the open market value of the goods in both supplies.

37 3. Accounting for GST on Other Transactions
A Year End Sale Not to be Missed!!! Photocopiers are going at an unbeatable price of $650 only!! Even more incredible news!!! Trade in your old photocopier for a BRAND NEW photocopier for only $450!! Unbelievable but true!! So come on down to our stores now !!! If both buyer and supplier are GST-registered and buyer traded-in an old photocopier for a new photocopier: Buyer needs to issue a tax invoice to supplier for $200 x prevailing GST rate. Supplier needs to issue a tax invoice to buyer for $650 x prevailing GST rate. If buyer is GST-registered but supplier is not: Buyer needs to issue tax invoice to supplier for $200 x prevailing GST rate. Supplier cannot charge GST on $650.

38 4. Claiming GST on Business Purchases and Imports
Conditions for Claiming Input Tax Disallowed Expenses Claiming Input Tax Claiming Input Tax on Purchases Paid in Foreign Currency Situations where Input Tax Claims are Disallowed Claiming Pre-registration Input Tax Repayment of Input Tax Relevant e-Tax Guides: “GST: General Guide For Businesses” “Exchange Rates for GST Purposes” “GST Guide on Imports”

39 4. Claiming GST on Business Purchases and Imports
Conditions for Claiming Input Tax You can claim GST incurred on your purchases as input tax if: You are GST-registered; The goods or services have been supplied to you or the goods have been imported by you; The goods or services are used or to be used for the purpose of your business; The input tax is directly attributable to taxable supplies or out-of-scope supplies which would be taxable if made in Singapore; The input tax claims are supported by tax invoices/ simplified tax invoices addressed to you. For imports, the claims should be supported by import permits showing you as the importer of the goods; and The input tax claims are not disallowed expenses under Regulation 26 and 27 of the GST (General) Regulations

40 4. Claiming GST on Business Purchases and Imports
Disallowed Expenses You are not allowed to claim input tax incurred on the following expenses: Club subscription fees Medical and accident insurance premiums* Medical expenses* Benefits provided to family members/relatives of your staff Cost and running expenses of motor cars Any transaction involving betting, sweepstakes, lotteries, fruit machines or games of chance *Except those obligatory under the Work Injury Compensation Act or under any collective agreement within the meaning of the Industrial Relations Act. Notes to Speaker 1: Point out that Medical expenses, Medical and Accident Insurance Premiums are disallowed, except those obligatory under the Work Injury Compensation Act or under any collective agreement under the Industrial Relations Act.

41 4. Claiming GST on Business Purchases and Imports
Claiming Input Tax Tax invoices and import permits are the primary documents for input tax claim and must be maintained to support the claim Other relevant documents like payment evidence, invoice from overseas supplier etc. must also be maintained Import permits should reflect your company as the importer of the goods Input tax to be claimed in the accounting period corresponding to the date shown in the tax invoice and import permit

42 4. Claiming GST on Business Purchases and Imports
Claiming Input Tax on Purchases Paid in Foreign Currency For invoicing in foreign currency, your supplier must convert the following items in the tax invoice into Singapore dollars using an approved exchange rate for GST purposes: - Total amount payable excluding GST; - Total GST payable; and - Total amount payable including GST You should claim the GST incurred based on the Singapore dollar amount shown on the tax invoice

43 4. Claiming GST on Business Purchases and Imports
Situations where Input Tax Claims are Disallowed Case 1 No valid supporting document Tax invoice issued in Co X’s name The purchases were for Co Y’s use Co Y claimed input tax based on this tax invoice Co Y’s input tax claims will be disallowed Case 2 Private Expenditure Mr. X (GST-registered sole-proprietor) holds tax invoices issued to him The GST was incurred for the purchase for a piano used at home Expenditure is of private nature Mr. X's input tax claims will be disallowed Notes for Speaker 1: Debit note is not a valid document for input tax claim One of the conditions for claiming input tax is that there must be a valid tax invoice addressed to your company

44 (For business purposes only)
APPLICATION EXERCISE No No Notes to Speaker 1: Elaborate on the above. For No. 1, cost and running expenses of motor cars (i.e. a S-plated car) is not claimable (disallowed expense). For No. 2, both companies are not able to claim the import GST because the import permit was wrongly taken up under the related company’s name. My company needs to take a correct import permit and the other permit should be cancelled with Singapore Customs. - For No. 3, claimable only if the company is able to ascertain that the handphone bills are incurred for business purposes and the staff is acting as an agent of the company to incur the bill. Yes (For business purposes only)

45 4. Claiming GST on Business Purchases and Imports
Claiming Pre-registration Input Tax For purchases made before your GST registration, you can claim the GST incurred if all the following conditions are satisfied: GOODS SERVICES Goods are purchased or imported in the course of business for making taxable supplies. Services are purchased for and supplied in the course of business for the making taxable supplies. Goods are not consumed or supplied before date of GST registration. Services are not related to goods/services already supplied or consumed before date of GST registration. A stock account is maintained with these details - date of purchase , quantities purchased etc. Services are not supplied more than 6 months before date of GST registration. Record is maintained with these details - description of services; date of purchase; and date of disposal (if any). Notes to Speaker 1: Can quote business assets as an example. For instance purchase of office premises for business use or stationeries.

46 4. Claiming GST on Business Purchases and Imports
Claiming Pre-registration Input Tax How to claim? Download and complete the “Self-Review for Eligibility to Claim Pre-Registration Input Tax” form (www.iras.gov.sg > Quick links > Forms > GST) Do not submit the form to IRAS unless requested. Claim pre-registration input tax only in your first GST F5 return. If the GST F5 return has been submitted, to request for GST F7 to amend the GST F5 submitted.

47 GST registration date : 01/01/2013
APPLICATION EXERCISE GST registration date : 01/01/2013 GST Incurred on Goods: Invoice Date Description Amount Claimable? 01/11/12 Purchase of stocks which were sold on /1/13 30/11/12 Utilities charges iii) 15/12/12 Office rental iv) 01/12/12 Goods imported and sold on 31/12/12 $1,000 Yes $300 No Notes to Speaker 1: Provide explanation for the answers. i) Emphasise that stocks were not sold before the date of registration, claimable in full. ii) Point out that utilities are considered goods. iii) Point out that office rental are considered goods. iv) Imported goods have been on supplied to customers. $2,500 No No $900

48 APPLICATION EXERCISE GST registration date : 01/01/2013
GST Incurred on Services: Invoice Date Description Amount Claimable? v) 01/05/12 Management fee $1,000 vi) 30/11/12 Consultancy fee $2,000 vii) 01/11/12 Commission paid $ for goods sold on 01/11/12 No Yes No Notes to Speaker 1: Provide explanation for the answers. v) As management fees were supplied more than 6 months before the date of registration, it cannot be claimed. vi) Consultancy fee is still within the 6 month period, can be claimed. vii) Related to goods that were on supplied to customers before the date of GST registration, cannot be claimed.

49 4. Claiming GST on Business Purchases and Imports
Repayment of Input Tax If you have not paid your supplier within 12 months from the due date of payment but have claimed the GST as input tax in your GST F5 return, you are required to repay the GST claimed Do so in the first GST F5 after the 12-month period by: Reducing the value of your taxable purchases (Box 5, “Value of taxable purchases”); and Reducing the value of the input tax claim (Box 7, “Input tax and refunds claimed”).

50 5. Price Display, Invoicing and Record-keeping
Displaying Prices Invoicing Customers Keeping Records Relevant e-Tax Guides: “GST: General Guide For Businesses” “Exchange Rates for GST Purposes” “Basic Record Keeping Guide for GST-registered Businesses” “Keeping Machine-sensible Records and Electronic Invoicing” “Keeping of Records in Imaging Systems”

51 5. Price Display, Invoicing and Record-keeping
Displaying Prices Any price displays (e.g. price tags, price lists, publicity brochures, advertisements) or quotations in respect of goods or services made to the public, be it written or verbal, must be shown inclusive of GST Failure to comply is an offence Exception: Hotel and Food & Beverage (F&B) industries where goods and services are subject to service charge may display GST exclusive price A statement informing customers that prices displayed are subject to GST and service charge must be prominently shown Notes to Speaker 1: Exception to Hotel and F&B industries made due to the imposition of service charge, these businesses may have operational difficulties in displaying GST-inclusive prices.

52 APPLICATION EXERCISE Displaying prices: Which are acceptable?
Price Displayed as Acceptable? $107 $107 (inclusive of GST) $100 + $100 + GST $ % GST $100 + $7 GST Yes Yes No No No No

53 5. Price Display, Invoicing and Record-keeping
Invoicing Customers Issuing tax invoices Importance of tax invoice Primary supporting document for input tax claims When to issue a tax invoice? Must be issued if making a standard-rated supply to a taxable person Within 30 days from the receipt of payment When not to issue a tax invoice? No need to issue tax invoices for: zero-rated supplies exempt supplies deemed supplies Notes to Speaker 1: Highlight that in cases where TP chooses to issue a tax invoice for a zero-rated supply, they need to indicate that GST is charged at 0%.

54 5. Price Display, Invoicing and Record-keeping
Issuing tax invoice in foreign currency For tax invoice issued in foreign currency, the following items on the tax invoice must be converted into Singapore dollars: total amount payable excluding GST; total GST amount; and total amount payable including GST The conversion must be based on an approved exchange rate.

55 5. Price Display, Invoicing and Record-keeping
Contents of a tax invoice An identifying number Invoice date Customer’s name (or business name) and address Description of goods and services Supplier’s name, address and GST registration number The words “tax invoice” Total amount payable excluding GST, total GST amount shown separately Total amount payable, including GST Breakdown of standard-rated, zero-rated, exempt or other supply if any and the gross amount payable in respect of each supply Convert into SGD if billing is in foreign currency 6 5 3 2 1 4 Notes for Speaker 1 : Part 10 when billing in foreign currency the 3 portions need to be converted into SGD: Total before GST GST Total amount including GST 7 8

56 5. Price Display, Invoicing and Record-keeping
Issuing simplified tax invoices When to Issue? Amount payable including tax ≤ $1,000 Only for standard-rated supplies What must be shown on a simplified tax invoice? Supplier’s name, address and GST registration number An identifying number (e.g. invoice number) Invoice date Description of the goods or services Total amount payable including GST The words “Price Payable inclusive of GST”

57 5. Price Display, Invoicing and Record-keeping
Keeping Records Income, purchase and business expense records Tax invoices/simplified tax invoices/receipts issued/received Business contract and agreement Credit notes and debit notes Import and export documents (e.g. import and export permit, bill of lading, air waybill) Payment evidence (e.g. bank statement) Tourist refund claim forms etc. Notes to Speaker 1: Inform TPs that the above are some of the records that they need to maintain. Records should be complete, up-to-date and allow for easy verification of the figures reported in their GST returns.

58 5. Price Display, Invoicing and Record-keeping
Other records to support GST declarations Source documents of all other business transactions which affect the output and input tax reported in the GST return Examples include: Usage of business assets for private purposes Disposal of business assets Removal of goods from customs-licensed warehouse Notes to Speaker 1: Inform TPs that they must also keep the source documents of all other business transactions which affect the output tax and input tax reported in their GST return. The above are some of those transactions..

59 5. Price Display, Invoicing and Record-keeping
Statements and accounting schedules The following should be maintained for the tracking and summary of 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 Stock records Bank Statements and Bank-in Slips Relevant Business Correspondences GST Accounts Financial Statements Statement of accounts such as Balance sheet and Profit and Loss Statements etc.

60 5. Price Display, Invoicing and Record-keeping
Sales and purchase listings Recommended format as follows: Sales Listing Purchases Listing Invoice date Invoice number Name of customer Description of supply Invoice amount excluding GST ($) GST ($) (if applicable) Destination of goods Invoice date Invoice number Name of supplier Supplier’s GST registration number Description of purchase Invoice amount excluding GST ($) GST ($)

61 5. Price Display, Invoicing and Record-keeping
How long do I keep records and accounts? Accounting records pertaining to prescribed accounting period ending: On or after 1 January 2007 – to keep for at least 5 years Before 1 January 2007 – to keep for at least 7 years Notes: Under Section 45

62 BREAK Notes to Speaker 1:
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 have any query, you may write them down on the Q&A paper provided and drop them into the box outside the auditorium when you go for your break. Thank you.

63 6. e-Filing GST Returns and Correcting Mistakes
Overview of e-Filing Completing GST F5 Important Things to Note on e-Filing Correcting Mistakes in GST Return Relevant e-Tax Guide/ User Guide: “How Do I Prepare My GST Returns?” “GST e-Filing User Guide” “GST: A Guide on Exports”

64 6. e-Filing GST Returns and Correcting Mistakes
Overview of e-Filing Step 1 Authorise Staff/Third Party to act for your organisation’s GST matters online You need your organisation’s e-Services Access Code to log in This step is required only if you are e-Filing GST return for the first time or if you need to edit an earlier authorisation via e-Services Authorisation System (EASY) Step 2 Retrieve and Complete GST F5 via myTax Portal Notes to Speaker 2: For step-by-step guide on authorisation and e-filing matters, businesses can download the GST e-Filing User Guide. For detailed instructions, you may download the “GST e-Filing User Guide” at Quick links> e-Services> GST.

65 6. e-Filing GST Returns and Correcting Mistakes
Completing GST F5 Box 1: Total value of standard-rated supplies The amount to report in Box 1 is the value of supplies which are subject to GST. This value should exclude the GST amount. Example: If you sell goods for $100 with $7 of GST, you should include $100 in Box 1. What to include Supplies of goods made in the course of your business E.g. Inter-company sale of goods (if not under Group/ Divisional Registration), lease of machinery Supplies of services made in the course of your business Sale of business assets Deemed supplies E.g. Gifts > $200 or forms a series of gifts OR Business assets put to non-business use What to deduct Reduction in the value of standard-rated supplies for which a credit note has been issued or a debit note has been received

66 6. e-Filing GST Returns and Correcting Mistakes
Box 2: Total value of zero-rated supplies What to include Supplies of goods which are exported Supplies of international services as listed in section 21(3) of the GST Act What to deduct Reduction in the value of zero-rated supplies for which a credit note has been issued or a debit note has been received Box 3: Total value of exempt supplies What to include Sales and leases of residential properties Supplies of financial services under the Fourth Schedule to the GST Act E.g. Interest from local banks, sale of equity, absolute value (i.e. to ignore any negative sign) of net realised exchange gain/loss for each prescribed accounting period Supply of Investment Precious Metals (IPM) (with effect from 1 Oct 2012)

67 6. e-Filing GST Returns and Correcting Mistakes
Box 3: Total value of exempt supplies (continue) Illustration: For the quarterly return ending Dec 2012 Month Oct Nov Dec Exchange gain/(loss) (150) 100 (200) The net realised foreign exchange loss for the quarter is $250 Interest received from fixed deposit is $400 You need to report $250 + $400 = $650 in Box 3 Box 4: Total value of Box (1) + Box (2) + Box (3) The value in this box will be automatically computed after you have filled in the amounts in Box 1, Box 2 and Box 3. Notes to Speaker 2: Elaborate on net realised gain/loss and how to compute it (i.e. report absolute figure).

68 6. e-Filing GST Returns and Correcting Mistakes
Box 5: Total value of taxable purchases The amount to report in Box 5 is the value of purchases and imports where the GST incurred can be claimed, and zero-rated purchases. This value should exclude the GST amount. Example: If you buy or import goods for $100 with $7 of GST, you should include $100 in Box 5. What to include Standard-rated purchases Imports Zero-rated purchases from GST-registered suppliers (e.g. purchase of air tickets, international freight charges, international call charges) Business purchases made before your date of GST registration which satisfy pre-registration input tax claim conditions (in first GST F5 only) What to deduct Reduction in the value of taxable purchases for which a credit note has been received or a debit note has been issued Value of taxable purchases corresponding to repayment of input tax What to exclude Wages and salaries Expenses where input tax is specifically disallowed Notes to Speaker 2: Emphasise to exclude disallowed expenses and purchases from non GST-registered suppliers in Box 5.

69 6. e-Filing GST Returns and Correcting Mistakes
Box 6: Output tax due In general, the amount to report in Box 6 is the GST charged on your standard-rated supplies. Example: If you sell goods for $100 with $7 of GST, you should include the $7 of GST in Box 6. What to include GST charged on the items included in Box 1 GST on debts that are recovered after you have claimed for your bad debt relief Claim of a refund made to a tourist if it was previously allowed to you and you are no longer entitled to it What to deduct Reduction in GST to be accounted for where a credit note has been issued or a debit note received

70 6. e-Filing GST Returns and Correcting Mistakes
Box 7: Input tax and refunds claimed In general, the amount to report in Box 7 is the GST incurred on your business purchases, and other GST refunds to claim. Example: If you buy or import goods for $100 with $7 of GST, you should include $7 in Box 7. What to include GST incurred on the standard-rated purchases included in Box 5 GST incurred on imports included in Box 5 Tourist refunds made to your customers (Applicable to businesses that operate the Tourist Refund Scheme only) Bad debt relief claim in which all the bad debt relief claim conditions can be satisfied Input tax claim for business purchases made before your date of GST registration which satisfy pre-registration input tax claim conditions (in first GST F5 only) What to deduct Reduction in GST to be claimed where a credit note has been received or a debit note issued Repayment of input tax claimed from IRAS but not paid to your supplier

71 6. e-Filing GST Returns and Correcting Mistakes
Box 8: Net GST to be paid to/claimed from IRAS The value in this box will be automatically computed after you have filled in the amounts in Box 6 and Box 7. Box 9: Total value of goods imported under this scheme This box is only applicable to businesses under the: Major Exporter Scheme; or Approved Third Party Logistics Company Scheme; or Other Approved Schemes    Box 10: Did you claim for GST you had refunded to tourists? If you have claimed any GST refunds made to tourist under the Tourist Refund Scheme in Box 7 (Input tax and refunds claimed), please indicate ‘Yes’ and state the amount claimed in this box. Box 11: Did you make any bad debt relief claims? If you have made bad debt relief claims in Box 7 (Input tax and refunds claimed), please indicate ‘Yes’ and state the amount that you have claimed in this box. Notes to Speaker 2: To highlight that if the net GST to be paid / claimed is < $5, there is no need to make payment and neither will any refund be made.

72 6. e-Filing GST Returns and Correcting Mistakes
Box 12: Did you make any pre-registration claims? This box is applicable to your first GST return only and will not be available in your subsequent GST returns. If you have made pre-registration input tax claims in Box 7 (Input tax and refunds claimed), please indicate ‘Yes’ and state the amount that you have claimed in this box. Box 13: Revenue In general, ‘revenue’ refers to income derived from your main income sources such as from the provision of services, sale of goods and any other operating income (i.e. gross sales/ gross income/ turnover). This value should be extracted from the revenue items (e.g. sales) in your profit & loss accounts, whether they have been audited or not. As this value is based on your accounting treatment, it may be different from the amount declared in Box 4 which is your total supplies based on GST requirements.

73 6. e-Filing GST Returns and Correcting Mistakes
Important Things to Note on e-Filing Due Dates for Submission of GST Return and GST Payment Filing and payment due date is 1 month after the end of each prescribed accounting period (E.g. due date for GST F5 return covering 1 Jan Mar 12 is 30 Apr 12) Penalties will be imposed for late submission of return and payment of tax Payment can be made via GIRO (deduction will be made on the 15th day of the following month after the filing due date), cheque or AXS. For details, refer to > Quick links > Payments > GST If net GST amount to be paid or claim is < $5, no payment or refund will be made Notes to Speaker 2: - To highlight that penalties will be imposed for late submission of return and payment. - Businesses to refer to the Acknowledgement page with each successful submission of return, for payment instructions (e.g. cross all cheques and make payable to “The Comptroller of GST” etc). Businesses can download the Giro application form from the same link links>Payments>GST. Processing of Giro application will take about a month.

74 6. e-Filing GST Returns and Correcting Mistakes
Important Things to Note on e-Filing Things to look out for when completing the GST Return To drop off cents for Boxes 1 to 5 & 9 Declare figures in S$, not in foreign currencies All boxes must be completed If no business is done, a ‘Nil’ return is still required Notes to Speaker 2: -- To emphasize to DROP OFF cents for Box 1-5 and 9, and that Box 6 and 7 should be accurate to the cents. NOT rounded off. - To ensure that no special characters are used. E.g. comma (,) or dash (-). - For empty boxes, put “0”, DON’T leave blank.

75 APPLICATION EXERCISE ABC company has the following business transactions for one accounting period: Transaction Value Fill in Box 1) Imports $20,000 2) Local sale $50,000 3) Local sale of fixed asset $5,500.50 4) Local purchase $8,100.40 5) Export sales* $50,070.80 5 1 1 5 2 *Please note that export sales qualify for zero-rating only if all the relevant export documents can be maintained within 60 days from the time of supply. You can refer to the e-Tax Guide “GST: A Guide on Exports” for the relevant documents to be maintained.

76 APPLICATION EXERCISE ABC company has the following business transactions for one accounting period: Transaction Value Fill in Box 1) Imports $20,000 2) Local sale $50,000 3) Local sale of fixed asset $5,500.50 4) Local purchase $8,100.40 5) Export sales* $50,070.80 5 1 1 5 2 Box 1: Total standard-rated supplies = (2) + (3) = $50,000 + $5,500.50 = $55,500.50 Box 2: Total zero-rated supplies = $50,070.80

77 APPLICATION EXERCISE ABC company has the following business transactions for one accounting period: Transaction Value Fill in Box 1) Imports $20,000 2) Local sale $50,000 3) Local sale of fixed asset $5,500.50 4) Local purchase $8,100.40 5) Export sales* $50,070.80 5 1 1 5 2 Box 5: Total value of taxable purchases = (1) + (4) = $20,000 + $8,100.40 = $28,100.40

78 APPLICATION EXERCISE What figures to fill for Box 6 (output tax) and Box 7 (input tax) ? Transaction Value Fill in Box GST Value Box 6 or 7? 1) Imports $20,000 5 $1,400 2) Local sale $50,000 1 $3,500 3) Local sale of fixed asset $5,500.50 $385.04 4) Local purchase $8,100.40 $567.03 5) Export sales $50,070.80 2 $0 7 6 6 7 NA Box 6: Output Tax Due = (2) + (3) = $3,500 + $385.04 = $3,885.04

79 APPLICATION EXERCISE What figures to fill for Box 6 (output tax) and Box 7 (input tax) ? Transaction Value Fill in Box GST Value Box 6 or 7? 1) Imports $20,000 5 $1,400 2) Local sale $50,000 1 $3,500 3) Local sale of fixed asset $5,500.50 $385.04 4) Local purchase $8,100.40 $567.03 5) Export sales $50,070.80 2 $0 7 6 6 7 NA Box 7: Input Tax and Refunds Claimed = (1) + (4) = $1,400 + $567.03 = $1,967.03

80 APPLICATION EXERCISE 55,500 50,070 105,570 28,100 3,885.04 1,967.03 1,918.01 Notes to Speaker 2: Reminder to drop off the cents in Box 1 to 5

81 6. e-Filing GST Returns and Correcting Mistakes
Correcting Mistakes in GST Return Mistakes made in your GST F5/F7/F8 return submitted can be corrected by filing a GST F7 “Disclosure of errors on GST return” To fill in the total revised figures inclusive of error adjustments (i.e. treat the GST F7 as a new GST return for the accounting period) GST F7 filed will supersede the F5/F7/F8 that was submitted previously for the same accounting period

82 6. e-Filing GST Returns and Correcting Mistakes
Correcting Mistakes in GST Return GST F7 can be requested and submitted electronically via myTax Portal. For detailed instructions on requesting for GST F7, you may refer to the “GST e-Filing User Guide”. GST > For GST-registered businesses > Complete & File GST return > Correct errors made in GST return (request for GST F7). As a concession, you may correct the errors in your next GST F5 return, subject to certain conditions as shown in the following flowchart.

83 6. e-Filing GST Returns and Correcting Mistakes
ERRORS NO Is the sum of non-GST errors** for each prescribed accounting period > 5% of total supplies? NO Include the errors in the next GST F5/F8 return Do the errors involve GST? YES NO Is the net GST error* for all affected accounting period(s) > $1,500? *GST error refers to a mistake made to the value declared in Box 6 and/or Box 7 of your submitted GST return. **Non-GST errors refer to all other mistakes made that are not GST errors. YES YES File F7

84 APPLICATION EXERCISE Scenario Errors Net GST error Adjustments
1. Errors involve GST amount only (value of supplies and purchases are correct) Qtr 1: Under-declared output GST by $300 Qtr 1: Under-declared input GST by $200 +$300 - $200 = +$100 Net GST error < $1,500; Non-GST error < 5% of total supplies. Correct mistake in next GST F5/F8 return. 2. Errors do not involve GST amount (GST values are correct) Qtr 1: Standard-rated supplies over-declared by $200 Qtr 1: Zero-rated supplies under-declared by $10,000 Qtr 1: Taxable purchases under-declared by $500 $200 + $10,000 + $500 = $10,700 $10,700 / $105,570 * 100 = 10.1% Non-GST errors > 5% of total supplies. Need to file GST F7. Increase Box 6 by $300 & Increase Box 7 by $200 in next GST F5/F8 return. You will need to revise all the figures (as if you are filing for the 1st time) in the GST F7 for Qtr1.

85 7. Penalties and Recovery Actions
Late Registration Non/Late Submission of GST Return Non/Late Payment of Tax Submission of Incorrect GST Return Failure to Keep Proper Records Relevant e-Tax Guides: “Do I Need to Register?” “How Do I Prepare My GST Return” “Basic Record Keeping Guide for GST-registered Businesses” “Keeping of Records in Imaging Systems” “Keeping Machine-sensible Records and Electronic Invoicing”

86 7. Penalties and Recovery Actions
Late Registration If a business fails to apply for GST registration within 30 days of the date its registration liability arises, the Comptroller has the power to: Back-date the GST-registration Business must account for GST on standard-rated supplies made from their effective date of GST registration. This is regardless of whether GST can be recovered from its customers Impose penalties 5% late payment penalty will be imposed on the tax that should have been paid earlier On conviction, the following shall be imposed: 10% penalty on tax due; and Fine not exceeding $10,000

87 7. Penalties and Recovery Actions
Non/Late Submission of GST Return If a business fails to submit GST return by the due date, the Comptroller can: Impose late submission penalty $200 late submission penalty for every completed month that GST F5/F8 remains outstanding (not exceeding $10,000 in penalty for each GST F5/F8) Raise estimated tax assessment and impose late payment penalty (LPP) Tax unpaid 60 days after the imposition of 5% LPP may be subject to an additional 2% penalty for each completed month (not exceeding 50% of tax outstanding)

88 7. Penalties and Recovery Actions
Non/Late Submission of GST Return Raise estimated tax assessment and impose late payment penalty (LPP) The estimated tax assessment and LPP will be adjusted upon receipt and finalisation of GST F5/F8. On conviction, the following will be imposed: Person responsible for the submission liable to a fine not exceeding $5,000 for each offence, and Imprisonment not exceeding 6 months for non-payment

89 7. Penalties and Recovery Actions
Non/Late Payment of Tax If a business fails to make GST payment by due date, the Comptroller can: Impose late payment penalty and issue a demand note 5% penalty on tax payable; and Tax unpaid 60 days after the imposition of 5% LPP may be subject to an additional 2% penalty for each completed month (not exceeding 50% of tax outstanding) Appoint agent (e.g. banks, tenants) for payment of tax Stop individual from leaving the country Take legal action

90 7. Penalties and Recovery Actions
Submission of Incorrect GST Return If a business submits an incorrect GST return, the Comptroller can: Raise additional tax assessment IRAS conducts random audits on GST-registered businesses Additional tax assessment will be raised to recover the taxes under-accounted/over-claimed On conviction, the following shall be imposed: Penalty up to 2 times the amount of tax under-accounted/over-claimed; and Fine up to $5,000 and/or imprisonment up to 3 years

91 7. Penalties and Recovery Actions
Failure to Keep Proper Records On conviction of failure to keep proper records, the following shall be imposed: Fine not exceeding $5,000; and/or Imprisonment not exceeding 6 months Repeated offence: Business will face fine not exceeding $10,000 and/or imprisonment not exceeding 3 years

92 APPLICATION EXERCISE Scenario Late submission? Penalty? Late payment?
a) F5 for 01 Oct 12 – 31 Dec 12 e-filed on 20 Jan 13. Sufficient funds were maintained for a successful GIRO deduction on 15 Feb 13. No NA No NA

93 Previous penalty on assessment raised would be adjusted accordingly
APPLICATION EXERCISE Scenarios Late Submission? Penalty? Late Payment? b) F5 for 01 Oct 12 – 31 Dec 12 e-filed on 28 Jan 13 with net tax payable of $1,000 which was paid to IRAS on 01 Apr 13. c) F5 for 01 Oct 12 – 31 Dec 12 e-filed on 15 Mar 13 with net tax payable of $1,000 which was paid to IRAS on 15 Mar 13. 5% x $1,000 + 2% x $1,000 No NA Yes 5% x $1,000 Previous penalty on assessment raised would be adjusted accordingly Notes to Speaker 2: Explain Scenario b), why there are two 2% penalty imposed. No 2% penalty for Scenario c) because the net tax payable was paid within 60 days from due date. (from website) An additional 2% penalty may be imposed: -60 days after the 5% penalty for late payment is imposed, and -Calculated immediately after the due date of each accounting period, and -For every completed month that the tax remains outstanding, and -Total additional penalty shall not exceed 50% of tax outstanding. Yes $200 Yes

94 8. Tips on Compliance How to Avoid Late Submission Penalty
How to Avoid Late Payment Penalty How to Ensure Accurate GST Reporting – The Four Building Blocks GST Assisted Self-help Kit (ASK) Relevant e-Tax Guides: “GST: General Guide for Businesses” “How Do I Prepare My GST Return” “Basic Record Keeping Guide for GST-registered Businesses” “Keeping of Records in Imaging Systems” “Keeping Machine-sensible Records and Electronic Invoicing” “IRAS Voluntary Disclosure Programme”

95 8. Tips on Compliance How to Avoid Late Submission Penalty
Ensure necessary resources are available for prompt filing of GST F5/F8 returns Ensure the person authorised for e-filing is able to log-in to myTax Portal much earlier than the due date of filing Ensure that the Acknowledgement Page is generated after each submission of GST F5/F7/F8 return online

96 8. Tips on Compliance How to Avoid Late Payment Penalty
For payment through GIRO, ensure you have sufficient funds in your GIRO bank account by the 15th of the month when payment is to be deducted Follow payment instructions on the Acknowledgement page generated with each successful submission of GST return Submit your GST returns and pay the tax declared by the due date. If you have not submitted the GST F5/F8 return, pay the tax assessed and submit the return immediately so that tax assessed can be adjusted

97 8. Tips on Compliance How to Ensure Accurate GST Reporting –
The 4 Building Blocks People Authorised staff doing the GST reporting Know the e-Filing and GST payment procedures Have adequate GST knowledge Ensure that GST treatment is correctly applied to transactions and clarify when unsure of GST treatment Keep abreast of GST developments by visiting IRAS’ website and attending relevant courses Management Directors/Shareholders to take interest in accuracy of GST reporting Engage qualified people for GST reporting or provide adequate training to staff Ensure proper handover during staff turnover (e.g. authorise the new staff at EASY to e-File GST returns) Notes to Speaker 2: Emphasize that mistakes are costly. Because apart from paying penalties, effort is required to correct them. The longer the errors are made, the more costly it gets as additional tax assessment can be raised for all the years that errors were made. One way to avoid these cost is to ensure that GST reporting is accurate.

98 8. Tips on Compliance 2. Systems
 For a list of accounting software that can produce IAF, please refer to > Businesses > IRAS Accounting Software Register. Use of suitable computerised accounting system/ software Coded table to classify your sales (type of supply) and purchases (whether claimable) when they are recorded In-built logic to detect duplicate records, discrepancies in GST rate and GST value, etc Function to generate a GST report to assist you in completing your GST returns Function to generate sales and purchases listings in the format of an IRAS Audit File (IAF) and/or softcopy sales and purchases listings in Microsoft Excel file format Notes to Speaker 2: GST-registered businesses should have a system to help them consolidate all their sales and purchases.

99 8. Tips on Compliance 3. Record-keeping Good record-keeping practices
To comply with the record-keeping requirements stated under Section 5. Good record-keeping practices Set up a good filing system Keep clear records with cross-references (e.g. credit notes issued should make reference to the original tax invoice) Ensure all transactions are captured accurately and in a timely manner in your accounting system Keep all IRAS’ correspondences (e.g. Approval for GST registrations and schemes, updates on GST changes, GST clarifications sought from IRAS etc.)

100 8. Tips on Compliance 4. Internal Controls
Good internal control Claiming input tax only upon receipt of tax invoice to avoid double claiming Ability to track all creation, amendment and approval of transactions GST return to undergo second level of review before submission Regular reviews to assess the accuracy of submitted GST returns

101 GST Assisted Self-help Kit (ASK)
8. Tips on Compliance GST Assisted Self-help Kit (ASK) ASK is a self-assessment package designed to help you enhance your GST compliance You can learn more about ASK at > For GST-registered Businesses > GST Initiatives to Facilitate Voluntary Compliance > GST Assisted Self-help Kit (ASK) GOOD GST COMPLIANCE GST Practices Pre- Filing Checklist ASK Annual Review Notes to Speaker 2: To place more emphasis on the benefits of ASK. ASK is launched on 01 Apr 2010 to help GST-registered businesses effectively manage their compliance. ASK focuses on 3 aspects: GST Practices to properly handle GST Reporting of transactions Pre-filing checklists Annual Review of past GST returns filed in each financial year. So, what are the benefits that GST-registered businesses can enjoy if they implement A.S.K? Firstly, with the information that IRAS has provided in Section 1: GST Practices, you will be able to understand the essential GST requirements on filing and record keeping that IRAS requires. Once you have that, you can even further improve and adopt the good practices. You can also review the correctness of your GST submissions by running through the Pre-Filing Checklists prior to submitting your GST returns to IRAS. This will prevent you from making common GST errors since they can be easily avoided via the self-checks introduced in A.S.K. By implementing the ASK Annual Review, you can also discover any past GST errors for timely disclosure to IRAS. As such, you can avoid or enjoy reduced penalties since this will be treated as a voluntary disclosure. Last but not least, A.S.K enables you to qualify for specific GST schemes, such as the IGDS. SECTION 1 SECTION 2 SECTION 3 GST Practices list down the essential requirements and good practices that you can include in the internal processes of your business. Pre-Filing Checklist is a set of questions and answers for you to go through before you file your GST return, so that you can avoid errors. ASK Annual Review guides you to do a self-review of your GST returns filed in the past financial year(s).

102 8. Tips on Compliance Voluntary disclosure of errors attracts lower penalties! For a start, you can go through “Avoid Costly GST Errors” enclosed in this seminar package and the GST Assisted Self-help Kit Notes to Speaker 2: You are strongly encouraged to conduct an annual self-review of your past GST returns submitted. If you discover errors in the course of your review, you should disclose them immediately. Penalties will be waived or reduced for voluntary disclosure. For more information, refer to > About IRAS > Taxpayer Compliance > IRAS Voluntary Disclosure Program

103 9. Notifying of Changes to Business and Cancelling GST Registration
Notifying Changes to Business Cancelling GST Registration Relevant e-Tax Guide: “Do I Need to Register?” “GST: General Guide for Businesses” “Transfer of Business as a Going Concern”

104 9. Notifying of Changes to Business and Cancelling GST Registration
Notifying Changes to Business Changes to Business Action Required Change in business details (E.g. business name, address or GST GIRO bank account number) Write in (post/fax/ ) with supporting documents (e.g. ACRA Business Profile) to inform IRAS within 30 days of change. Cessation of business GST registration will not be automatically cancelled upon cessation of business To apply for cancellation of GST registration within 30 days of business cessation by submitting form GST F9 (Application for Cancellation of GST)

105 9. Notifying of Changes to Business and Cancelling GST Registration
Action Required Change in business constitution or ownership Transfer of business from one person to another (E.g. convert from sole- proprietorship to private limited company) Transferor: previous business constitution/owner Transferee: new business constitution/owner Transferor To apply for cancellation of GST registration within 30 days of the date of transfer by submitting GST F9 if transferor ceases to make taxable supplies after the transfer. Transferee Assess if business is liable to be GST- registered Submit GST F1 (Application for GST Registration) and Documentation Checklist within 30 days of the date of transfer should taxable turnover exceed S$1 million

106 9. Notifying of Changes to Business and Cancelling GST Registration
Other than cessation of business, you may cancel your GST registration if your business turnover is below the compulsory registration threshold To notify the Comptroller by submitting GST F9 (Application for cancellation of GST) Once application is approved, you will be notified of the effective date of de-registration and will be required to submit a GST F8 (Final GST return) To account for output tax if value of assets on hand including stock, fixed assets and non-residential properties (for which input tax has been allowed previously) exceeds $10,000 Notes to Speaker 2: At point of de-registration, for assets on hand which input tax has been allowed, need to account for deemed output tax if total value exceeds $10,000. Assets include stocks, fixed assets and non-residential properties. Value will be based on open market value at point of de-registration. GST will be charged at prevailing rate. For companies that are GST-registered on a voluntary basis, they are required to remain registered for at least 2 years unless the company has ceased or stop making taxable supplies.

107 10. Where To Get Help - IRAS website (www.iras.gov.sg)
- enquiries (www.iras.gov.sg > Contact Info > Us) - Fax enquiries ( ) - Letter enquiries (The Comptroller of Goods and Services Tax Inland Revenue Authority of Singapore 55 Newton Road Revenue House Singapore ) - GST helpline ( ) Counter service at Revenue House (Monday to Friday only: From 8am to 5pm)

108 10. Where To Get Help “Ask IRAS” e-Tax Guides > GST

109 Log onto myTax portal @https://mytax.iras.gov.sg
GST E-SERVICES 24 Hours, 7 days a week View Return Status Check the status (e.g. if GST return is successfully submitted to IRAS) of GST F5, F7 and F8 Update contact details and subscribe to Alert View or update your contact information online, such as your GST mailing address and to subscribe to GST alerts. View Correspondence/ Notices Retrieval of Acknowledgement page View Account Summary/ Payments View tax account details; Request statement of accounts; View payment plan schedules; Make payment via internet banking; Request payment voucher to make payment via other payment modes 5. Apply for GST Registration/ Cancellation of GST Registration 6. Apply for Declaration of Agents Maintain list of authorised declaring agents for businesses approved under Major Exporter Scheme (MES)/Third Party Logistics Company Scheme (3PL) Log onto myTax for all these and more ...

110 iSPRINT (Packaged Solutions)
With effect from 1 Apr 2012, all businesses (GST-registered and non-GST-registered) can apply to IDA for a grant under IDA’s iSPRINT (Packaged Solutions) scheme to defray the costs of purchasing accounting software that are listed on IRAS’ Accounting Software Register. Businesses can claim up to 50% of the qualifying costs for the purchase of the first packaged solution (listed) under each solution category. For more details on the list of packaged solutions, please refer to IDA website. Please note that businesses must obtain IDA's grant approval before purchase can be made.

111 iSPRINT (Packaged Solutions)
Who is eligible? How Do I Qualify? You are a local SME with minimum 30% local shareholding and You do not already own/ use any other solutions that you are going to adopt (i.e. accounting, payroll or POS solution) and Company's Group annual sales turnover not more than S$100 million or Company's Group employment size not more than 200 workers. For more details on the scheme, please visit IDA at

112 GST Course by Tax Academy of Singapore
Course Title : Executive Tax Programme Level I (GST) Duration : 3.5 days Course fee : Refer to website (*IRAS is offering up to 50% subsidy on all Executive Tax Programmes. ) For more details, visit: or contact Ms Toh Hui Bin Eunice at , Notes to Speaker 2: Latest course fee can be obtained from Tax Academy’s website. Currently, the course price is $ (before subsidy).

113 GST Workshop by Tax Academy of Singapore
Workshop Title : FasTax Series – Getting GST Right Duration : 1 day Workshop fee : Refer to website For more details, visit: or contact Ms Jocelyn Chong at Ms Amuna Manyuni at Or to: Notes to Speaker 2: Latest workshop fee can be obtained from Tax Academy’s website. Currently, the course price is $

114 Answers to Application Exercises
Slide 21: Slide 48: 7%, exempt, 0% (v) No, (vi) Yes, (Vii) No Slide 22: Slide 52: N (out-of-scope), Y (0%), Y (7%) Yes, Yes, No, No, No, No Slide 23: Slide 75: N (exempt), Y (7% – commercial; 1) 5, 2) 1, 3) 1, 4) 5, 5) 2 Exempt – residential), N (out-of-scope) Slide 78: Slide 44: 1) 7, 2) 6, 3) 6, 4) 7, 5) NA No Slide 92: Yes (For business purposes only) No, NA, No, NA Slide 47: Slide 93: (i) Yes, (ii) No, (iii) No, (iv) No No, NA, Yes Yes, $200, Yes

115 Join GIRO Now! Why GIRO? Convenient - GIRO is an electronic cashless mode of payment & removes the hassle of writing cheques. No more late payment - You will not miss the payment due dates. Enjoy interest-free instalments - For income tax ECI payments, companies can enjoy up to 10 monthly interest-free instalments. For property tax, companies can enjoy up to 12 monthly interest-free instalments, or opt for a one-time GIRO deduction.

116 Join GIRO Now! Enhance cash flow - Funds stay in your account longer
Why GIRO? Enhance cash flow - Funds stay in your account longer For Goods & Services Tax, GIRO deduction is on 15th of the month, 15 days after the filing due date via a one-time deduction. For Section 45 withholding tax, GIRO deduction is on 25th of the month, 10 days after the filing due date via a one-time deduction. Faster tax refund - You can receive tax refund faster as it will be credited directly to your bank account. You do not have to wait for a cheque to be posted to you. Full control over GIRO with IRAS’ e-Services - You can view your GIRO plan and tax account balance simply by logging into myTaxportal.

117 Join GIRO Now! How to sign up for GIRO?
Simply complete one form and sign up to pay by GIRO for all your taxes. The form is available on IRAS website: Links>Forms>GIRO Application Forms

118 Master GIRO Application Form
Select the tax types you wish to apply for GIRO and the type of payment plan.

119 Company’s Income Tax Obligations

120 Company’s Income Tax Obligations
Seminars & Events).

121 Q & A


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