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INLAND REVENUE AUTHORITY OF SINGAPORE

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  1. INLAND REVENUE AUTHORITY OF SINGAPORE

  2. GST General Guide for Traders How do I keep Records and Accounts How do I prepare my GST Return? Lecture Notes on GST Class GST Class Feedback Form Slip on IRAS Homepage Q&A question slip COURSE MATERIAL

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

  4. CONTENTS • Common Misconceptions • Application Exercise • Penalties & Recovery Actions • Q & A session • Feedback

  5. OVERVIEW OF GST SYSTEM • What is GST? - tax on domestic consumption - paid whenever customers buy goods or services from GST registered businesses - charged and accounted for at a rate of 7% (with effect from 1 July 2007)

  6. OVERVIEW OF GST SYSTEM • Are All Goods And Services Taxable? - All Goods and Services within the GST System are taxable except those which have been specifically exempted by the Act - Main exempt items are financial services and the sale or lease of residential properties

  7. OVERVIEW OF GST SYSTEM • Who Collects GST? - For supply of goods or services in Singapore, GST is collected by traders like you who have registered with the Comptroller of GST - For importation of goods, GST is collected by the Singapore Customs at the point of importation

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

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

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

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

  12. HOW GST WORKS SELLING PRICEGST Payable Import Value = $ 5,000 GST paid on import = $350 Manufacturer’s Price = $10,000 Manufacturer GST Collected = $700 GST Amount = $ 700Less: GST Paid = $350 Selling Price = $10,700 GST Payable = $350 Retailer’s Price = $20,000 GST Collected = $1,400 GST Amount = $ 1,400RetailerLess: GST Paid = $ 700 Selling Price = $21,400 GST Payable = $ 700 Consumer pays = $21,400 Total GST Paid = $1,400 Consumer

  13. CONCEPTS OF GST • Scope of Tax • Types of Supply • When Should You Account for GST? • What Is the Value of Supply That Is Subject to GST?

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

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

  16. SCOPE OF TAX MADE IN SINGAPORE? PLACE OF SUPPLY Goods are supplied in Singapore if • goods are in Singapore or from Singapore Services are supplied in Singapore if • supplier belongs in Singapore

  17. SCOPE OF TAX • TAXABLE SUPPLY - A supply of goods or services made in Singapore other than an exempt supply - Consist of standard-rated and zero- rated supplies

  18. SCOPE OF TAX • Taxable Person - A person that is GST-registered or is required to be registered for GST under the Act

  19. TYPES OF SUPPLY • Non-Taxable • Taxable Out-of-Scope Exempt

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

  21. NON-TAXABLE SUPPLY Out -of-scope Supply • Private Transactions • Third Country Sales (Sales outside Singapore) Exempt Supply • Sale and Lease of Residential Properties • Financial Services

  22. Goods are shipped from China to U.S.A. without coming into S’pore Supply is out-of-scope

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

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

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

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

  27. WHEN SHOULD YOU ACCOUNT FOR GST? 14-day Rule • Tax invoice issued within 14 days when the goods are removed • Time of supply is the tax invoice date, provided payment is not made yet

  28. WHEN SHOULD YOU ACCOUNT FOR GST? 14-day Rule Total value of supply - $11,000 Invoice for payment Goods Invoice for Balance received $5,000 Removed Amount $11,000 ($11,000 - $5,000) 01/03/07 31/03/07 14/04/07 Time of supply : ?

  29. WHEN SHOULD YOU ACCOUNT FOR GST? 14-day Rule Total value of supply - $11,000 Invoice for payment Goods Invoice for Balance received $5,000 Removed Amount $11,000 ($11,000 - $5,000) 01/03/07 31/03/07 14/04/07 Time of supply : 01/03/07 ($5,000) 14/04/07 ($6,000)

  30. WHEN SHOULD YOU ACCOUNT FOR GST? SERVICES Time of Supply for Services • Services are completed; • Tax invoice issued; or • Payment received whichever is the earliest Subject to 14-day rule

  31. WHEN SHOULD YOU ACCOUNT FOR GST? 14-day Rule • Tax invoice issued within 14 days when the services are completed • Time of supply is tax invoice date, provided payment is not made yet

  32. WHAT IS THE VALUE OF SUPPLY THAT IS SUBJECT TO GST? Value of Supply • Consideration in money • Value + GST = Consideration Eg: $100 (Value) + $7 (GST) = $107

  33. WHAT IS THE VALUE OF SUPPLY THAT IS SUBJECT TO GST? • Consideration not in money Value of supply = open market value • Trade/cash discount given Value of supply = discounted price

  34. WHAT IS THE VALUE OF SUPPLY THAT IS SUBJECT TO GST? • Transactions with related parties Value of supply = open market value • Eg: Co. X, a GST-registered business, sold the company’s furniture (market value $5,000) to one of its directors at $800. • Value of supply should be $5,000.

  35. WHAT IS THE VALUE OF SUPPLY THAT IS SUBJECT TO GST? • Goods for private use • Eg: Mr Y, a renovation contractor who is GST registered, uses business goods such as marble tiles for his own home • If the cost of materials is $10,000, GST = $10,000 x 7% = $700

  36. EXPORTS • Zero-rated • Evidence of exports required Supporting export documents : • Bill of Lading , Airway Bill • IESGP permit (previously known as TDB permit). Please note that permit must be taken before the export of goods, otherwise, the Comptroller may not accept it as evidence

  37. EXPORTS Supporting export documents : • invoice to overseas customer • purchase order • insurance documents • packing list or delivery note addressed to overseas customer • evidence of payment received

  38. TAX INVOICE • Importance of Tax Invoice • When to issue a Tax Invoice? • When not to issue a Tax Invoice? • Contents of a Tax Invoice • Simplified Tax Invoice

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

  40. WHEN TO ISSUE A TAX INVOICE? • must be issued if making a standard-rated supply to a taxable person • within 30 days after time of supply

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

  42. CONTENTS OF A TAX INVOICE Tax invoice must show : • an identifying number • invoice date • your customer’s name (or trading name) and address • description of the goods and services • your name, address and GST registration number

  43. CONTENTS OF A TAX INVOICE • the words “tax invoice” • total amount payable excluding tax, the rate of GST and the total tax chargeable shown separately • total amount payable, including tax • breakdown of exempt, zero-rated or other supply, stating separately the gross amount payable in respect of each

  44. SIMPLIFIED TAX INVOICE When to Issue? • amount payable including tax <$1,000 • only for standard-rated supplies Particulars • name, address and registration number • date of issue • description of the goods or services • total amount payable including GST • the words “Price Payable inclusive of GST”

  45. PURCHASES • Claiming of input tax • Imports • Disallowed Input Tax Claims • Conditions for Pre-registration Input Tax Claims