Goods and Services Tax (GST)

20/03/2017 (C) POH 1

Outline

 What is GST and how it works

 Scope of GST imposition
 What is a supply
 Types of supply

 Place of supply

 GST registration

 Furtherance of business

 Importation and imports relief

20/03/2017 (C) POH 2

Outline

 Value of supply and imports

 GST reporting period and time of supply
 Claim of input tax credit
 Administrative provisions
 GST and income tax

20/03/2017 (C) POH 3

 What is GST and how it works

20/03/2017 (C) POH 4

Basic terminology
biz input biz output

Supplier BIZ Customer

(GST-registered) (GST-registered)
[3] [1]

[4] [2]

IRAS

 Output GST: charged on biz. outputs, [1] generally collected from

customers, and [2] payable to IRAS
 Input GST: [3] paid/payable to GST-registered suppliers on biz.
inputs, but [4] recoverable from IRAS as input tax credit if certain
conditions are satisfied

20/03/2017 (C) POH 5

Basic terminology
imported biz input (goods) biz output

BIZ Customer
(GST-registered)
[3] [1]

[4] [2]

IRAS

SG Customs

 Input GST: [3] paid/payable to SGP Customs

O Supplier on imported biz. inputs (goods), but [4]
recoverable from IRAS as input tax credit if
certain conditions are satisfied

20/03/2017 (C) POH 6

How GST works - example

Example
Production/distribution chain
SP (bef. GST) VA
RM supplier $100 $100
Manufacturer 180 80
Retailer 200 20
Consumer ____
$200

20/03/2017 (C) POH 7

How GST works - example

 Some assumptions:
 RM supplier has no inputs (SP = VA)
 Product is standard-rated
 All businesses are GST-registered
 Full forward shifting of the tax

20/03/2017 (C) POH 8

How GST works - example

$100+$7.00 $180+$12.60 $200+$14.00

RM SUP MFR RET CONS

$7.00 $12.60

$7.00 $12.60 $14.00

IRAS

20/03/2017 (C) POH 9

What is GST?

 multi-stage tax, collected at each stage of the

production/distribution chain
 businesses act as collecting agents
 tax on value added
 e.g. for the manufacturer, the net GST payable is 7% x
$80 = $5.60
 intended burden is on final consumers, hence
GST is a consumption tax
 i.e. the total GST of $14 is borne by the consumer

20/03/2017 (C) POH 10

 Scope of GST imposition

20/03/2017 (C) POH 11

Scope of GST imposition
– ss 7,8

SUPPLY IMPORTATION
 a supply  of goods
 of goods/services  into Singapore
 which is a taxable supply
 by any person
 made in Singapore
 by a taxable person
(GST-registered biz)
 in the furtherance of biz.

Collected by: Collected by:

GST-registered biz. SGP Customs
20/03/2017 (C) POH 12
 Scope of GST imposition – Supply
Meaning of supply
Deemed supplies

20/03/2017 (C) POH 13

What is a supply?

 s10 – anything done for a consideration

 anything done for free is not a supply

unless deemed so by the GSTA

e.g. 2nd Schedule deemed supplies

20/03/2017 (C) POH 14

2nd Schedule deemed supplies
 business goods disposed of for free [para
5(1)], except [para 5(2)]:
 biz. gift costing not more than $200
 industrial/commercial sample … to actual/potential
customer … in a form not ordinarily available for
sale to the public
 business goods diverted for free to non-
business uses [para 5(3)]
 2nd Sch, para 5(4) exception:
para 5(1) and (3) apply only if the trader claims
input tax credit i.r.o. the goods

20/03/2017 (C) POH 15

2nd Schedule deemed supplies

 3rd Sch, para 8 and 9:

generally, market value (or if not available,
cost) is taken as the value of the deemed
supply

20/03/2017 (C) POH 16

Question 1
biz. gift of vase
purchase of vase - deemed supply?
CTT BHPL Biz Assoc
(GST-reg) (GST-reg)
$70 i/p tax

$70 i/p tax o/p tax

credit accountable?

IRAS

20/03/2017 (C) POH 17

Question 1 (con’t)
biz. gift of vase
purchase of vase - deemed supply?
CTT BHPL Biz Assoc
(GST-reg) (GST-reg)
$70 i/p tax

forgo i/p tax o/p tax

credit accountable?

IRAS

20/03/2017 (C) POH 18

Question 2 (Scenario 2)
biz. gift of vase
purchase of vase - deemed supply?
STT BHPL Biz Assoc
(not GST-reg) (GST-reg)
no i/p tax

no i/p tax o/p tax

credit accountable?

IRAS

20/03/2017 (C) POH 19

Question 2 (Scenario 1)
purchase of vase biz. gift of vase
cost ≤ $200 - deemed supply?
CTT BHPL Biz Assoc
(GST-reg) (GST-reg)
$7 i/p tax

$7 i/p tax o/p tax

credit accountable?

IRAS

20/03/2017 (C) POH 20

 Scope of GST imposition – Supply
Types of supply

20/03/2017 (C) POH 21

Types of supply

Supply made in SGP OUT-OF-SCOPE

(outside the scope of GST)
No supply or
Supply made outside SGP

TAXABLE EXEMPT
(excluded from scope of GST by s22 and 4th Sch)
Certain financial services
Sale and lease of residential properties
…

STD-RATED ZERO-RATED
7% o/p tax 0% o/p tax
Exports of goods
International services – s21(3)

20/03/2017 (C) POH 22

Exempt financial services – 4th Sch, Part I, para 1
Some examples

“(a) the operation of any current, deposit or savings

account”

“(e) the issue, allotment, transfer of ownership, drawing,

acceptance or endorsement of a debt security”

“(f) the issue, allotment or transfer of ownership of an

equity security”

“(g) the provision of any loan, advance or credit”

20/03/2017 (C) POH 23

Zero-rated international services – s21(3)
Some examples

(a) [international transport of goods and passengers]

“(e) … services supplied directly in connection with land

or any improvement thereto situated outside Singapore”

“(j) … services supplied – (i) under a contract with a

person who belongs in a country outside Singapore; and
(ii) which directly benefit a person who belongs in a
country other than Singapore and who is outside
Singapore at the time the services are performed”

20/03/2017 (C) POH 24

GST treatment
biz input biz output

Supplier BIZ Customer

(GST-registered) (GST-registered)

[2] [1]

SG Customs IRAS

[1] Is 7% output tax payable to IRAS in respect of the supply (of biz
output)?
[2] Is input tax credit recoverable from IRAS in respect of input tax
paid/payable on the purchase/importation of any biz input used in
the making of the supply (of biz output)?

20/03/2017 (C) POH 25

GST treatment – OOS v EX v SR v ZR
Type of supply (of biz output)

OOS EX T-SR T-ZR

[1] Is 7% output tax payable N N Y N
to IRAS on the supply?

[2] Is input tax credit

recoverable from IRAS in N* N* Y** Y**
respect of input tax on inputs
used in the making of the
supply?

* Some exceptions apply

** Provided that other relevant conditions are met

20/03/2017 (C) POH 26

SR at all stages of
production/distribution chain
$100+$7.00 $180+$12.60 $200+$14.00

RM SUP MFR RET CONS

$7.00 $12.60

$7.00 $12.60 $14.00

IRAS

20/03/2017 (C) POH 27

Effect of ZR at retail stage

$100+$7.00 $180+$12.60 $200+$0.00

RM SUP MFR RET CONS

$7.00 $12.60

$7.00 $12.60 $0.00

IRAS

20/03/2017 (C) POH 28

Effect of EX at retail stage

$100+$7.00 $180+$12.60 $212.60+$0.00

RM SUP MFR RET CONS

$7.00 $12.60

$7.00 $0.00 $0.00

IRAS

20/03/2017 (C) POH 29

 Scope of GST imposition – Supply
Place of supply

20/03/2017 (C) POH 30

Place of supply - ss 13, 15

 Supply of goods is made in Singapore if

the goods are physically located in
Singapore at the time of their
appropriation/removal for the supply

 Supply of services is made in Singapore

if the supplier belongs in Singapore

20/03/2017 (C) POH 31

Country where supplier belongs

 Supplier belongs in Singapore if:

 the biz. or fixed establishment most directly
connected with the supply of the service is
in Singapore; or
 the supplier’s usual place of residence is in
Singapore*
* applies only if the supplier does not have a biz. or
fixed establishment anywhere in the world
A company’s usual place of residence is where it is
incorporated

20/03/2017 (C) POH 32

Supply of goods ____ SGP:
____ supply

goods Japanese
customer
UK warehouse

SGP factory
sale
contract
SGP trader

20/03/2017 (C) POH 33

Supply of goods ____ SGP:
____ supply

UK warehouse
goods

SGP factory

SGP customer
SGP trader
sale
contract

20/03/2017 (C) POH 34

Supply of goods ____ SGP:
____ supply

goods Japanese
customer
UK warehouse

SGP factory
sale
contract
SGP trader

20/03/2017 (C) POH 35

Supply of goods ____ SGP:
____ supply

UK warehouse

goods
SGP factory

SGP customer
SGP trader
sale
contract

20/03/2017 (C) POH 36

Supply of goods ____ SGP:
____ supply

Japanese customer
UK warehouse sale Japan factory
contract

SGP factory
SGP factory
goods

SGP trader

20/03/2017 (C) POH 37

Supply of services ____ SGP:
____ supply
UK consultancy firm
UK office

SGP office

Consultancy contract
SGP traderConsultancy service

SGP customer

20/03/2017 (C) POH 38

Supply of services ____ SGP:
____ supply
UK consultancy firm
UK office

SGP office

Consultancy contract
SGP traderConsultancy service

SGP customer

20/03/2017 (C) POH 39

Supply of services

More scenarios in Question 3

20/03/2017 (C) POH 40

 Scope of GST imposition – Supply
Taxable person
GST registration

20/03/2017 (C) POH 41

GST registration
Who has to register for GST?

 Compulsory – s9 and 1st Sch, para 1

 Retrospective test
 Prospective test

 Voluntary – 1st Sch, para 8 and 9

20/03/2017 (C) POH 42

Compulsory registration

 Retrospective test
 applies on 31/3, 30/6, 30/9 and 31/12 only

 total value of taxable supplies* for the last 4

quarters > $1m?
if yes, must register
(unless IRAS is satisfied that total value of
taxable supplies* for the next 4 quarters 
$1m)

20/03/2017 (C) POH 43

Compulsory registration

 Prospective test
 applies at any date
 total value of taxable supplies* expected in
the next 12 months > $1m?
if yes, must register
 For the purpose of ascertaining liability to
register ONLY, taxable supplies* exclude
sales of capital assets

20/03/2017 (C) POH 44

Compulsory registration
 Aggregation of taxable supplies of all separate
businesses of a:
 sole proprietor
 partnership with the same composition of partners
 If there is a liability to register, IRAS must be
notified within 30 days
 Application for exemption from registration
where taxable supplies are wholly or
substantially zero-rated

20/03/2017 (C) POH 45

Timeline of prospective test

Let’s assume it is 11 Apr 2017 today

12 months*

11.4.2017 10.4.2018

* taxable supplies (excl. sales of CA) > $1m?

20/03/2017 (C) POH 46
Timeline of retrospective
and prospective tests

Let’s assume it is 31 Mar 2017 today

4 quarters* 4 quarters*

31.3.2016 31.3.2017 31.3.2018

12 months*
* taxable supplies (excl. sales of CA) > $1m?

20/03/2017 (C) POH 47

GST registration – Prospective test

Question 4

20/03/2017 (C) POH 48

Voluntary registration
 2 situations:
 trader with annual taxable supplies  $1m

 trader with a biz. establishment in

Singapore making only certain OOS
transactions

 costs v benefits

20/03/2017 (C) POH 49

 Scope of GST imposition – Supply
Furtherance of business

20/03/2017 (C) POH 50

Furtherance of business - s 3

 Furtherance of business
≠ Ordinary course of business

 Contrast with private transaction

20/03/2017 (C) POH 51

 Scope of GST imposition
- Importation

20/03/2017 (C) POH 52

Importation and imports relief

 7% GST payable to Customs at the point of

importation of goods into Singapore

 Owner/consignee/importer liable to pay

regardless of whether GST-registered

 Relief from GST payment at the point of

importation may apply under s24 and the GST
(Imports Relief) Order

20/03/2017 (C) POH 53

Imports relief - examples

 temporary imports
 re-importation of goods temporarily exported
 imports under various import GST suspension
schemes
 imports of used articles / personal belongings
and new goods (s.t. limits) by a bona fide
traveller

20/03/2017 (C) POH 54

 Value of supply and
value of imported good

20/03/2017 (C) POH 55

Value of supply - s17, 3rd Sch

MC = VOS + GST
107% 100% 7%

100% 93.46% 6.54%

if GST is absorbed by the trader

GST = 7% x VOS

VOS = OMV if consideration is not wholly in money

20/03/2017 (C) POH 56

Value of import - s18, 3rd Sch

VOI = CIF price + customs duty (if any)

GST = 7% x VOI

20/03/2017 (C) POH 57

 GST reporting period
Time of supply

20/03/2017 (C) POH 58

GST reporting period
- s 41, R 45

 Prescribed (GST) accounting periods

 generally, every quarter, as follows:
 QE 31/1, 30/4, 31/7, 31/10; OR
 QE 28/2, 31/5, 31/8, 30/11; OR

 QE 31/3, 30/6, 30/9, 31/12,

whichever set fits in with the trader’s financial year

 monthly and 6-monthly reporting periods
apply for certain traders

20/03/2017 (C) POH 59

GST reporting period

 Submit a GST return for every quarter within

one month of the end of that quarter
 In the GST return,
 account for output tax payable to IRAS; and
 claim input tax credits recoverable from IRAS.
 if o/p tax > i/p tax cr, difference is payable within one
month of the end of the quarter
 if i/p tax cr > o/p tax, difference is refundable within 3
months of filing the quarterly return

20/03/2017 (C) POH 60

Time of supply – ss 11, 12
 When must output tax be charged / accounted
for on a std-rated supply?
 General rule: time of a supply occurs on the:
(a) date on which any invoice or bill for payment is
issued in respect of the supply; or
(b) date on which payment is received in respect of
the supply,
whichever is the earlier
 Other rules apply in exceptional situations

20/03/2017 (C) POH 61

Example – Time of supply

GST reporting periods: QE 31/3, 30/6, 30/9, 31/12

Date of removal of goods for sale 25/09/17
Date of issuance of invoice 05/10/17
Date payment is received 15/10/17

When to account for output GST?

05/10/17  a/c o/p tax in QE 31/12/17

20/03/2017 (C) POH 62

Time of supply

Question 5

20/03/2017 (C) POH 63

 Claim of input tax credits

20/03/2017 (C) POH 64

Claim of input tax credits
(Recoverability of input tax)
Conditions for input tax credit claim
(ss 19, 20):
 Trader is GST-registered
 Input tax relates to a business input
 Input is used in the making of taxable (or certain
out-of-scope) supplies, i.e. input tax is attributable
to the making of such supplies
 Input tax attributable to the making of exempt
supplies is not recoverable, s.t. Reg. 28, 33, 34 and 35 GST
partial exemption rules

20/03/2017 (C) POH 65

Claim of input tax credits
(Recoverability of input tax)
 Input tax relates to the GST reporting
period concerned and is properly
charged by the supplier
 Documentary evidence in support of
input tax credit claim
 Supplier’s tax invoice
 Customs GST payment permit

 Input tax is not blocked by Reg. 26 and

27
20/03/2017 (C) POH 66
Blocked input tax

Input tax on:

 Sporting/recreational club fees
 Medical and accident insurance premiums
 Medical expenses
 Employee’s “family benefits”
 Transactions involving games of chance
 Motor cars, as defined, incl. goods and
services used directly in connection therewith

20/03/2017 (C) POH 67

 Administrative provisions

20/03/2017 (C) POH 68

Some administrative provisions

 Issuance of tax invoice – Reg. 10

 Contents of tax invoice – Reg. 11
 Simplified tax invoice – Reg. 13
 Issuance of serially printed receipt – s44
 Maintenance of business/accounting
records and documentation – s46

20/03/2017 (C) POH 69

 GST and income tax

20/03/2017 (C) POH 70

GST and income tax

 Issue:

 Since input tax is paid/payable by a person,

can the person obtain any income tax
benefit for it?

20/03/2017 (C) POH 71

Is there any income tax benefit for input
tax paid/payable?

 Can the input tax be claimed as an input

tax credit in the GST return?
 If yes, NO income tax benefit
 If no (i.e. taxpayer is not GST-registered or the input
tax credit is blocked), the input tax is treated as
part of the underlying expense and the
income tax treatment follows that of the
underlying expense

20/03/2017 (C) POH 72

Examples to be discussed:
Income tax benefit for input tax?
Input tax Income tax
credit? benefit?
Taxpayer is GST-registered

Input tax on purchases of trading stock

Input tax on purchases of plant/machinery

Input tax on annual golf club subscription fee

Input tax on S-plate car expenses

20/03/2017 (C) POH 73

Examples to be discussed:
Income tax benefit for input tax?
Input tax Income tax
credit? benefit?
Taxpayer is not GST-registered

Input tax on purchases of trading stock

Input tax on purchases of plant/machinery

Input tax on annual golf club subscription fee

Input tax on S-plate car expenses

20/03/2017 (C) POH 74