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 seminarBenefits include:On-demand availability: accessible anytime and anywhere at your convenienceSelf-pacing: control over the pace of learning and modules can be reviewed as often as neededInteractivity: 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 TransactionsClaiming GST on Business Purchases and ImportsPrice Display, Invoicing and Record-keepingBREAK6. e-Filing GST returns and Correcting Mistakes7. Penalties and Recovery Actions8. Tips on Compliance9. Notifying of Changes to Business and Cancelling GST Registration10. Where to Get HelpUseful InformationQ&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 goodsPaid 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 taxNotes 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?equalsNet GSTGST paid on business purchases(Input tax)lessGST 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 ComptrollerRefundable from Comptroller
7 1. GST and My Responsibilities GST-Registered Retailer$700 + $49 (7% GST)Output tax = $49Input tax = $35Net GST payable = $14End-consumer$ $70 (7% GST)Output tax = $70Input tax = $49Net GST payable = $21GST-Registered Wholesaler$500 + $35 (7% GST)Import GST = $35Overseas SupplierNotes 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 mannerSubmit accurate GST returnsMaintain listings and keep business and accounting records for 5 yearsAssist in GST auditDisplay prices with GSTReflect GST registration number on all tax invoices and receiptsInform IRAS of changes to the businessAccount for GST on business assets held at point of de-registrationIn 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 TaxValue of Supply Subject to GSTAbsorbing GSTAccounting for GSTBad Debt Relief ClaimRelevant 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 Singaporeii) a taxable supplyiii) made by a taxable personiv) 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 kindGenerally tangible objectsCould be new or second-handExample: FurnitureUtilities (e.g. water, electricity) and space for rent/ sale are treated as goods for GST purposes.Anything that is not goodsPerformance of duty or work for another personGenerally intangibleExample: 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 supplyServices are supplied in Singapore if the supplier belongs in SingaporeNotes 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 suppliesTAXABLE SUPPLIESNON-TAXABLE SUPPLIES1. Standard-Rated Supply (7% GST)Local sales of goods & servicesSale of Capital Assets1. Exempt SupplySale and Lease of ResidentialPropertiesFinancial ServicesLocal Sale of Investment Precious Metals (IPM)Zero-Rated Supply (0% GST)Export of GoodsInternational ServicesOut-of-Scope SupplyThird Country Sales(Sales outside Singapore)TranshipmentsDisbursementsNotes 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-ratedList of financial services can be found under 4th Schedule eg. Interest income received from local banksElaborate 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 SalesGST registration liabilityRegistering 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); orYou 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 monthsOtherwise, the business need not register for GST, unless it chooses to do so voluntarilyAdditional responsibilities for voluntarily registered businessesremain GST-registered for at least 2 yearsmake taxable supplies within 2 years if you have not started making taxable supplies at the point of registrationThe 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 SalesGST registration liability - Rules for Sole-proprietorship (Owned by an Individual)Combine the turnover of all SPship businesses to ascertain the liability to registerGST 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 futureSP should use the same GST registration number to charge GST for all existing SPship businesses and any newly set-up SPship businessNotify IRAS of any new SPship business by sending in its ACRA Business ProfileNotes 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 SalesGST 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 returnTotal Turnover/Income = $500,000 + $490,000 + $30,000 = $1,020,000As 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 SalesGST registration liability - Rules for Partnership (PP)GST registration will be in the name of the respective PP businessesOnce 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 SalesGST 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 = $500,000As 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 Salesiv) 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 EXERCISESuppliesStandard-Rated (7% GST)Zero-Rated (0% GST)ExemptOut-of-scopea) 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 EXERCISEScenariosTaxable 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 YY(0%)Y Y YNotes 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 YY(7% - commercial) (Exempt - residential)Y(Commercial) Y YN(out-of-scope)N Y Y
24 2. Charging GST on Sales Value of Supply Subject to GST Examplea) Trade discountNet discounted priceI 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 SalesValue of SupplyExampleb) Transactions with related partiesOpen Market Value (OMV) of goodsCo. A (GST-registered), sold the company’s furniture (market value $5,000) to one of its directors at $800.Value of supply = $5,000GST = $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 customerThe sum of money received from your customer will be treated as inclusive of GSTThe GST to be accounted for is based on the tax fraction of 7/107 of the consideration receivedExample: 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 = $93.46GST = $100 X 7/107 = $6.54
27 BASIC TAX POINT & 14-DAY RULE NOW REMOVED 2. Charging GST on SalesAccounting for GSTIn general, you should account for GST at the earlier of the following events:Invoice issued; orPayment receivedFor more information, you may refer to the e-Tax Guide “GST: Time of Supply Rules”.BASIC TAX POINT & 14-DAY RULE NOW REMOVEDNotes 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); orPayment received
28 APPLICATION EXERCISE Total value of goods sold = $11,000 Invoiced for $11,000 and received part-payment of $5,00001/01/12Received remaining payment of $6,00001/02/12Goods removed (Value = $11,000)31/01/12Notes 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 reliefclaim can be made on output tax that was previously accounted for and paid toIRAS if you meet the conditions below:Conditions1I have supplied goods or services for a consideration in moneyand have accounted for and paid GST on the supply.2I have written off the whole or any part of the consideration for the supply as a bad debt in my accounts.3A 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.4I 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 FreeFringe Benefits to StaffRecovery of ExpensesSale of Business/Capital AssetsTrade-in TransactionNotes 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 FreeGiving Services for FreeNo output tax needs to be accounted for as there is no supplyGiving Goods for Free (i.e. Free Gifts)Prior to 1 Oct 2012Deemed as supply of goodsOutput 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; orCost of gift ≤ $200, but 3 or more gifts were given to the same person within 3 monthsFrom 1 Oct 2012You only need to account for output tax if the cost of each gift exceeds $200; andIf input tax on those goods has been allowed to you.Notes to Speaker 1:Prior to 1 Oct 2012Point out that should more than one gift be presented together on a single occasion, the goods presented will be considered as a single gift.ExampleGift 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 2012The 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;andYou 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 StaffPrior to 1 Oct 2012Goods and services given free to all employeesOutput 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 accommodationOutput tax to be accounted for if GST was incurred on the purchaseWith effect from 1 Oct 2012Output 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; orGifts for which no credit for input tax has been allowed on its purchase.Notes to Speaker 1:With effect from 1 Oct 2012The same new deeming conditions are applicable for fringe benefits given to staffExampleCompany 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 ExpensesPrior to 31 May 2013A 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 disbursementsThe 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; andThe 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 2013A 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 disbursementsThe 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; andThe 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 ExpensesWith effect from 31 May 2013GST treatment for any recovery of expenses will be as follows:If you incur the expenses as a principalIf you pay the expenses as an agentThe recovery of expenses isa reimbursementa disbursementGST treatmentThe 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 claimYou 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 2013GST 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 AssetsGST-registered businesses must account for GST on all taxable supplies madeGST is chargeable on the sale of business/capital asset though it is not considered the main business activityFor example, sale of office equipment, factory or old furniture is subject to GST
36 3. Accounting for GST on Other Transactions Trade-in TransactionTreated as 2 separate supplies for GST purposeGST must be accounted for on the value of the 2 separate suppliesIncorrect to account for GST on the net difference onlyNotes 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 ondown 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 TaxDisallowed ExpensesClaiming Input TaxClaiming Input Tax on Purchases Paid in Foreign CurrencySituations where Input Tax Claims are DisallowedClaiming Pre-registration Input TaxRepayment of Input TaxRelevant 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 TaxYou 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; andThe 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 ExpensesYou are not allowed to claim input tax incurred on the following expenses:Club subscription feesMedical and accident insurance premiums*Medical expenses*Benefits provided to family members/relatives of your staffCost and running expenses of motor carsAny 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 TaxTax invoices and import permits are the primary documents for input tax claim and must be maintained to support the claimOther relevant documents like payment evidence, invoice from overseas supplier etc. must also be maintainedImport permits should reflect your company as the importer of the goodsInput 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 CurrencyFor 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 GSTYou 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 DisallowedCase 1No valid supporting documentTax invoice issued in Co X’s nameThe purchases were for Co Y’s useCo Y claimed input tax based on this tax invoiceCo Y’s input tax claims will be disallowedCase 2Private ExpenditureMr. X (GST-registered sole-proprietor) holds tax invoices issued to himThe GST was incurred for the purchase for a piano used at homeExpenditure is of private natureMr. X's input tax claims will be disallowedNotes for Speaker 1:Debit note is not a valid document for input tax claimOne 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 EXERCISENoNoNotes 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 TaxFor purchases made before your GST registration, you can claim the GST incurred if all the following conditions are satisfied:GOODSSERVICESGoods 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 TaxHow 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 EXERCISEGST registration date : 01/01/2013GST Incurred on Goods:Invoice Date Description Amount Claimable?01/11/12 Purchase of stocks which were sold on /1/1330/11/12 Utilities chargesiii) 15/12/12 Office rentaliv) 01/12/12 Goods imported andsold on 31/12/12$1,000Yes$300NoNotes 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.$2,500NoNo$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 $1,000vi) 30/11/12 Consultancy fee $2,000vii) 01/11/12 Commission paid $ for goods sold on01/11/12NoYesNoNotes 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 TaxIf 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 claimedDo 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”); andReducing the value of the input tax claim (Box 7, “Input tax and refunds claimed”).
50 5. Price Display, Invoicing and Record-keeping Displaying PricesInvoicing CustomersKeeping RecordsRelevant 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 PricesAny 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 GSTFailure to comply is an offenceException:Hotel and Food & Beverage (F&B) industries where goods and services are subject to service charge may display GST exclusive priceA statement informing customers that prices displayed are subject to GST and service charge must be prominently shownNotes 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 asAcceptable?$107$107 (inclusive of GST)$100 +$100 + GST$ % GST$100 + $7 GSTYesYesNoNoNoNo
53 5. Price Display, Invoicing and Record-keeping Invoicing CustomersIssuing tax invoicesImportance of tax invoicePrimary supporting document for input tax claimsWhen to issue a tax invoice?Must be issued if making a standard-rated supply to a taxable personWithin 30 days from the receipt of paymentWhen not to issue a tax invoice?No need to issue tax invoices for:zero-rated suppliesexempt suppliesdeemed suppliesNotes 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 currencyFor 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; andtotal amount payable including GSTThe conversion must be based on an approved exchange rate.
55 5. Price Display, Invoicing and Record-keeping Contents of a tax invoiceAn identifying numberInvoice dateCustomer’s name (or business name) and addressDescription of goods and servicesSupplier’s name, address and GST registration numberThe words “tax invoice”Total amount payable excluding GST, total GST amount shown separatelyTotal amount payable, including GSTBreakdown of standard-rated, zero-rated, exempt or other supply if any and the gross amount payable in respect of each supplyConvert into SGD if billing is in foreign currency653214Notes for Speaker 1 :Part 10 when billing in foreign currency the 3 portions need to be converted into SGD:Total before GSTGSTTotal amount including GST78
56 5. Price Display, Invoicing and Record-keeping Issuing simplified tax invoicesWhen to Issue?Amount payable including tax ≤ $1,000Only for standard-rated suppliesWhat must be shown on a simplified tax invoice?Supplier’s name, address and GST registration numberAn identifying number (e.g. invoice number)Invoice dateDescription of the goods or servicesTotal amount payable including GSTThe words “Price Payable inclusive of GST”
57 5. Price Display, Invoicing and Record-keeping Keeping RecordsIncome, purchase and business expense recordsTax invoices/simplified tax invoices/receipts issued/receivedBusiness contract and agreementCredit notes and debit notesImport 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 declarationsSource documents of all other business transactions which affect the output and input tax reported in the GST returnExamples include:Usage of business assets for private purposesDisposal of business assetsRemoval of goods from customs-licensed warehouseNotes 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 schedulesThe following should be maintained for the tracking and summary of records:General Ledgers/ Debtors and Creditors LedgersPurchase Orders and Delivery NotesPurchase and Sales Books/ Cash Books and other account booksRecords of daily takingsStock recordsBank Statements and Bank-in SlipsRelevant Business CorrespondencesGST AccountsFinancial StatementsStatement of accounts such as Balance sheet and Profit and Loss Statements etc.
60 5. Price Display, Invoicing and Record-keeping Sales and purchase listingsRecommended format as follows:Sales ListingPurchases ListingInvoice dateInvoice numberName of customerDescription of supplyInvoice amount excluding GST ($)GST ($)(if applicable)Destination of goodsInvoice dateInvoice numberName of supplierSupplier’s GST registration numberDescription of purchaseInvoice amount excluding GST ($)GST ($)
61 5. Price Display, Invoicing and Record-keeping How long do I keep records and accounts?Accounting records pertaining to prescribed accountingperiod ending:On or after 1 January 2007 – to keep for at least 5 yearsBefore 1 January 2007 – to keep for at least 7 yearsNotes: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-FilingCompleting GST F5Important Things to Note on e-FilingCorrecting Mistakes in GST ReturnRelevant 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-FilingStep 1Authorise Staff/Third Party to act for your organisation’s GST matters onlineYou need your organisation’s e-Services Access Code to log inThis step is required only if you are e-Filing GST return for the first time or if you need to edit an earlier authorisationvia e-Services Authorisation System (EASY)Step 2Retrieve and Complete GST F5via myTax PortalNotes 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 F5Box 1: Total value of standard-rated suppliesThe 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 includeSupplies of goods made in the course of your businessE.g. Inter-company sale of goods (if not under Group/ Divisional Registration), lease of machinerySupplies of services made in the course of your businessSale of business assetsDeemed suppliesE.g. Gifts > $200 or forms a series of gifts OR Business assets put to non-business useWhat to deductReduction 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 suppliesWhat to includeSupplies of goods which are exportedSupplies of international services as listed in section 21(3) of the GST ActWhat to deductReduction in the value of zero-rated supplies for which a credit note has been issued or a debit note has been receivedBox 3: Total value of exempt suppliesWhat to includeSales and leases of residential propertiesSupplies of financial services under the Fourth Schedule to the GST ActE.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 periodSupply 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 2012Month Oct Nov DecExchange gain/(loss) (150) 100 (200)The net realised foreign exchange loss for the quarter is $250Interest received from fixed deposit is $400You need to report $250 + $400 = $650 in Box 3Box 4: Total value of Box (1) + Box (2) + Box (3)The value in this box will be automatically computed after you have filled inthe 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 purchasesThe 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 includeStandard-rated purchasesImportsZero-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 deductReduction in the value of taxable purchases for which a credit note has been received or a debit note has been issuedValue of taxable purchases corresponding to repayment of input taxWhat to excludeWages and salariesExpenses where input tax is specifically disallowedNotes 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 dueIn 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 includeGST charged on the items included in Box 1GST on debts that are recovered after you have claimed for your bad debt reliefClaim of a refund made to a tourist if it was previously allowed to you and you are no longer entitled to itWhat to deductReduction 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 claimedIn 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 includeGST incurred on the standard-rated purchases included in Box 5GST incurred on imports included in Box 5Tourist 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 satisfiedInput 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 deductReduction in GST to be claimed where a credit note has been received or a debit note issuedRepayment 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 IRASThe 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 schemeThis box is only applicable to businesses under the:Major Exporter Scheme; orApproved Third Party Logistics Company Scheme; orOther Approved SchemesBox 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: RevenueIn 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-FilingDue Dates for Submission of GST Return and GST PaymentFiling 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 taxPayment 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 > GSTIf net GST amount to be paid or claim is < $5, no payment or refund will be madeNotes to Speaker 2:- To highlight that penalties will be imposed for late submission of return and payment.- Businesses to refer to the Acknowledgement page with each successful submission of return, for payment instructions (e.g. cross all cheques and make payable to “The Comptroller of GST” etc).Businesses can download the Giro application form from the same link links>Payments>GST. Processing of Giro application will take about a month.
74 6. e-Filing GST Returns and Correcting Mistakes Important Things to Note on e-FilingThings to look out for when completing the GST ReturnTo drop off cents for Boxes 1 to 5 & 9Declare figures in S$, not in foreign currenciesAll boxes must be completedIf no business is done, a ‘Nil’ return is still requiredNotes 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 EXERCISEABC company has the following business transactions for one accounting period:TransactionValueFill in Box1) Imports$20,0002) Local sale$50,0003) Local sale of fixed asset$5,500.504) Local purchase$8,100.405) Export sales*$50,070.8051152*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 EXERCISEABC company has the following business transactions for one accounting period:TransactionValueFill in Box1) Imports$20,0002) Local sale$50,0003) Local sale of fixed asset$5,500.504) Local purchase$8,100.405) Export sales*$50,070.8051152Box 1: Total standard-rated supplies = (2) + (3)= $50,000 + $5,500.50= $55,500.50Box 2: Total zero-rated supplies = $50,070.80
77 APPLICATION EXERCISEABC company has the following business transactions for one accounting period:TransactionValueFill in Box1) Imports$20,0002) Local sale$50,0003) Local sale of fixed asset$5,500.504) Local purchase$8,100.405) Export sales*$50,070.8051152Box 5: Total value of taxable purchases = (1) + (4)= $20,000 + $8,100.40= $28,100.40
78 APPLICATION EXERCISEWhat figures to fill for Box 6 (output tax) and Box 7 (input tax) ?TransactionValueFill in BoxGST ValueBox 6 or 7?1) Imports$20,0005$1,4002) Local sale$50,0001$3,5003) Local sale of fixed asset$5,500.50$385.044) Local purchase$8,100.40$567.035) Export sales$50,070.802$07667NABox 6: Output Tax Due = (2) + (3)= $3,500 + $385.04= $3,885.04
79 APPLICATION EXERCISEWhat figures to fill for Box 6 (output tax) and Box 7 (input tax) ?TransactionValueFill in BoxGST ValueBox 6 or 7?1) Imports$20,0005$1,4002) Local sale$50,0001$3,5003) Local sale of fixed asset$5,500.50$385.044) Local purchase$8,100.40$567.035) Export sales$50,070.802$07667NABox 7: Input Tax and Refunds Claimed = (1) + (4)= $1,400 + $567.03= $1,967.03
80 APPLICATION EXERCISE55,50050,070105,57028,1003,885.041,967.031,918.01Notes 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 ReturnMistakes 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 ReturnGST 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 ERRORSNOIs the sum of non-GST errors** foreach prescribed accounting period> 5% of total supplies?NOInclude the errorsin the next GST F5/F8 returnDo the errors involve GST?YESNOIs 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.YESYESFile 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 $300Qtr 1: Under-declared input GST by $200+$300 - $200 = +$100Net 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 $200Qtr 1: Zero-rated supplies under-declared by $10,000Qtr 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 $200in next GST F5/F8 return.You will need torevise all thefigures (as if youare filing for the1st time) in the GST F7 for Qtr1.
85 7. Penalties and Recovery Actions Late RegistrationNon/Late Submission of GST ReturnNon/Late Payment of TaxSubmission of Incorrect GST ReturnFailure to Keep Proper RecordsRelevant 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 RegistrationIf 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-registrationBusiness 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 customersImpose penalties5% late payment penalty will be imposed on the tax that should have been paid earlierOn conviction, the following shall be imposed:10% penalty on tax due; andFine not exceeding $10,000
87 7. Penalties and Recovery Actions Non/Late Submission of GST ReturnIf 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 ReturnRaise 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, andImprisonment not exceeding 6 months for non-payment
89 7. Penalties and Recovery Actions Non/Late Payment of TaxIf a business fails to make GST payment by due date, the Comptroller can:Impose late payment penalty and issue a demand note5% penalty on tax payable; andTax 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 taxStop individual from leaving the countryTake legal action
90 7. Penalties and Recovery Actions Submission of Incorrect GST ReturnIf a business submits an incorrect GST return, the Comptroller can:Raise additional tax assessmentIRAS conducts random audits on GST-registered businessesAdditional tax assessment will be raised to recover the taxes under-accounted/over-claimedOn conviction, the following shall be imposed:Penalty up to 2 times the amount of tax under-accounted/over-claimed; andFine up to $5,000 and/or imprisonment up to 3 years
91 7. Penalties and Recovery Actions Failure to Keep Proper RecordsOn conviction of failure to keep proper records, the following shall be imposed:Fine not exceeding $5,000; and/orImprisonment not exceeding 6 monthsRepeated 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 on15 Feb 13.NoNANoNA
93 Previous penalty on assessment raised would be adjusted accordingly APPLICATION EXERCISEScenariosLate 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 $1,000NoNAYes5% x $1,000Previous penalty on assessment raised would be adjusted accordinglyNotes 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$200Yes
94 8. Tips on Compliance How to Avoid Late Submission Penalty How to Avoid Late Payment PenaltyHow to Ensure Accurate GST Reporting – The Four Building BlocksGST 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 returnsEnsure the person authorised for e-filing is able to log-in to myTax Portal much earlier than the due date of filingEnsure 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 deductedFollow payment instructions on the Acknowledgement page generated with each successful submission of GST returnSubmit 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 BlocksPeopleAuthorised staff doing the GST reportingKnow the e-Filing and GST payment proceduresHave adequate GST knowledgeEnsure that GST treatment is correctly applied to transactions and clarify when unsure of GST treatmentKeep abreast of GST developments by visiting IRAS’ website and attending relevant coursesManagementDirectors/Shareholders to take interest in accuracy of GST reportingEngage qualified people for GST reporting or provide adequate training to staffEnsure 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/ softwareCoded table to classify your sales (type of supply) and purchases (whether claimable) when they are recordedIn-built logic to detect duplicate records, discrepancies in GST rate and GST value, etcFunction to generate a GST report to assist you in completing your GST returnsFunction 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 formatNotes 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 underSection 5.Good record-keeping practicesSet up a good filing systemKeep 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 systemKeep 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 controlClaiming input tax only upon receipt of tax invoice to avoid double claimingAbility to track all creation, amendment and approval of transactionsGST return to undergo second level of review before submissionRegular reviews to assess the accuracy of submitted GST returns
101 GST Assisted Self-help Kit (ASK) 8. Tips on ComplianceGST Assisted Self-help Kit (ASK)ASK is a self-assessment package designed to help you enhance your GST complianceYou can learn more about ASK at > For GST-registered Businesses > GST Initiatives to Facilitate Voluntary Compliance > GST Assisted Self-help Kit (ASK)GOOD GST COMPLIANCEGST PracticesPre- Filing ChecklistASK Annual ReviewNotes 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 transactionsPre-filing checklistsAnnual 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 1SECTION 2SECTION 3GST 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 ComplianceVoluntary disclosure of errors attracts lower penalties!For a start, you can go through“Avoid Costly GST Errors”enclosed in this seminar package and theGST Assisted Self-help KitNotes 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 BusinessCancelling GST RegistrationRelevant 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 BusinessChanges to BusinessAction RequiredChange 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 businessGST registration will not be automatically cancelled upon cessation of businessTo 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 RequiredChange in business constitution or ownershipTransfer of business from one person to another (E.g. convert from sole- proprietorship to private limited company)Transferor: previous business constitution/ownerTransferee: new business constitution/ownerTransferorTo 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.TransfereeAssess if business is liable to be GST- registeredSubmit 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 thresholdTo 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 $10,000Notes 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 TaxInland Revenue Authority of Singapore 55 Newton RoadRevenue HouseSingapore )- 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-SERVICES24 Hours, 7 days a weekView Return StatusCheck the status (e.g. if GST return is successfully submitted to IRAS) of GST F5, F7 and F8Update contact details and subscribe to AlertView or update your contact information online, such as your GST mailing address and to subscribe to GST alerts.View Correspondence/ NoticesRetrieval of Acknowledgement pageView Account Summary/ PaymentsView 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 modes5. Apply for GST Registration/ Cancellation of GST Registration6. 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 myTaxfor 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 purchaseof the first packaged solution (listed) under each solution category. Formore details on the list of packaged solutions, please refer to IDAwebsite.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 andYou do not already own/ use any other solutions that you are going to adopt (i.e. accounting, payroll or POS solution) andCompany's Group annual sales turnover not more than S$100 million orCompany'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 allExecutive Tax Programmes. )For more details, visit: or contactMs 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 RightDuration : 1 day Workshop fee : Refer to websiteFor more details, visit: or contactMs Jocelyn Chong atMs Amuna Manyuni atOr 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) NoSlide 22:Slide 52:N (out-of-scope), Y (0%), Y (7%)Yes, Yes, No, No, No, NoSlide 23:Slide 75:N (exempt), Y (7% – commercial;1) 5, 2) 1, 3) 1, 4) 5, 5) 2Exempt – residential), N (out-of-scope)Slide 78:Slide 44:1) 7, 2) 6, 3) 6, 4) 7, 5) NANoSlide 92:Yes (For business purposes only)No, NA, No, NASlide 47:Slide 93:(i) Yes, (ii) No, (iii) No, (iv) NoNo, NA, YesYes, $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 longerFor 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 intomyTaxportal.
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.