Beruflich Dokumente
Kultur Dokumente
Real Property
Accounting for GST
17 NOVEMBER 2014
1
BriefingAgenda
1. Issue related to Properties Developer
2. Charging Output Tax
4. Apportionment Rules
5. GST Adjustments
6. Filing of GST Return
2
1
Issue related to
Properties Developer
3
TIE-IN GIFTS
• The value of the gift is reflected in the price of the principal
goods supplied
Not subject to GST
However, if the gift is used for making exempt
supply, the registrant cannot claim ITC
• Example
developer gives Astro decoder to residential house
buyer
the supply of the decoder by the developer is not
subject to GST
• Subject to Gift Rule
4
Supply of goods
Consideration + GST
Property Buyer
Residential/comme
rcial
5
GST TREATMENT ON PROPERTY
Suspension Of Work
Not subject to GST if:
Payment made as compensation for the loss of
income or for costs incurred as a result of
suspension of work.
Exempt supply if
made by taxable person to the owner of residential
property (recipient) regardless whether with or without
consideration
ancillary to the supplies of residential properties.
Standard supply if
Recipient is not the owner of the residential property
The property is a non residential property
7
OTHER RELATED ISSUE
8
GST TREATMENT ON PROPERTY
Treatment of Deposit
Deposit given or payment of booking fee in
respect of a supply
is not regarded as payment unless
developer applies as consideration.
If payment received upon signing of S & P that
payment will form part payment
Subject to GST
9
OTHER RELATED ISSUES
Acquisition of Government and Statutory Services
• OUT OF SCOPE
all supplies by government
All acquisitions of services and fees imposed by the
Government related to real estate ( premium charges,
conversion premium, licence, registration, search and
transfer fees )
assessment rate imposed by the local authorities
10
• STANDARD RATED
• Apply for extension of water / electricity- 80% project completed.
Applications be made within 3-5 months prior to the date of such
supply.
11
RETENTION SUM
12
GST TREATMENT ON RECTIFICATION OF DEFECTS
Scenario (a)
If developer ("D") hires another sub-contractor ("SC") to do the
rectification:
("SC") supplies his construction service to ("D").
If SC( Registered person), has to charge ("D") GST on the supply of
construction services( rectification works performed).
("D") then charged GST on the supply this construction services to
"MC").
13
GST TREATMENT ON RECTIFICATION OF DEFECTS
Supply of construction
services to D(inv and
charge GST)
MC D Supply of property P
Onward supply of
construction services
(inv and charge GST on
rectification work
Rectification work =
Supply of construction
10,000.00
Retention sum 50,000.00 services to D
SC
14
OTHER RELATED ISSUES
Loan of stock and equipments
• Raw materials on loan
it is a supply, because the materials is used and the
replacement will not be the same materials (similar or same
kind of materials)
will attract GST
• Equipments on loan
Supply of services as it will be returned to the owner
subject to GST
15
16
Purchaser
Joint
acquisition of Developer
land and
services to Sale Purchaser
construct of
and sell Lots Landholder Lots
Purchaser
Joint Development
Purchaser
17
Acquisitions
of materials
and services
Purchaser
Developer
Purchaser
Provide Proportion
services of profit
Purchaser
Land
owner Sale of Purchaser
completed
Lot
18
SCENARIO 1- VALUE AND TIME OF SUPPLY
19
SCENARIO 2- VALUE AND TIME OF SUPPLY
20
SCENARIO 3- VALUE AND TIME OF SUPPLY
21
SCENARIO 3 CONT:- VALUE AND TIME OF SUPPLY
22
2
23
Output Tax
Toll highway
Financial services
Childcare services
25
Types of supply - exempt
Services
The supply of services by management corporation and joint
management bodies to owners in low and low medium cost
housing held under strata title
Funeral, Burial and Cremation Services in a package
Goods
Residential property
land for agricultural purposes and land for general use
(government building and burial ground)
Investment gold
26
Types of supply – zero rated
Goods
Agriculture products - paddy, fresh vegetables & fruits
Foodstuff - rice, sugar, table salt, plain flour, cooking oil, mee kuning,
laksa, kuey teow , bihun, bread, (the, kopi, coco) powder
Livestock supplies - live animals and unprocessed meat
Poultry & eggs
Fish – live, fresh, frozen, dried
The supply of the first 300 units of electricity to domestic users
The supply of water to domestic users
Exported goods/ exported services
Education - text book, exercise books, newspaper
Medicine - 2900 drugs under NEM List are zero rated
27 27
Output Tax
GST charged on
taxable supplies
sales of goods
provision of services
deemed supplies
disposal of business assets
private use of business asset
imported services
goods supplied by overseas supplier via agents,
contract or toll manufacturers (drop shipment)
gifts costing more than RM500
28 28
Output Tax
Supplies not subject to GST
cash donation or grants where a person does
not get benefits
compensation or liquidated damages
disbursements, dividends, loan repayments or
capital injection
transfer of business as a going concern
contribution to pension, provident or social
security fund
29 29
ITC ON PROPERTY DEVELOPMENT
EXCEPTION
• INPUT TAX ON TAXABLE SUPPLY ON RESIDENTIAL
ITC
Claimable
JKR
Road SYABAS
KL DEVELOPER TNB
Substation
KL Sewerage GOVERNMENT
Develop Reservoir
er school
32 32
Serial number
Supplier
Identification
Name and
address of
person being The total amount
supplied payable excluding
tax, the rate of tax
and the total tax
chargeable shown
as a separate
amount.
Sufficient
description The total amount
payable including
the total tax
33
chargeable 33
Supplier
Identification
Date of invoice
Sufficient
description
34 34
2
35
Allowable Input Tax
Supplies
taxable supplies
standard rated or zero rated supplies
disregarded supplies (supplies within group, supplies
made in warehouse and supplies between toll
manufacturer and overseas principal)
supplies made outside Malaysia which would be taxable
supplies if made in Malaysia
36 36
Supplies Made Outside Malaysia
B
Factory
Inputs: Purchase
clothes
office Supplies
rental, clothes
utilities, A
office
furniture Operational
Headquarters
issue
invoices
C
37
Allowable Input Tax
Incidental financial supplies:
deposit of money
exchange of currency
holding of bonds or other debt securities
transfer of ownership of securities
provision of loans, advance or credit to employees or
connected persons
assignment of provision of trade receivables
holding or transfer of trust unit
hedging of interest, commodity, utility or freight risk 38
Incidental Financial Supplies
Special tax treatment does not apply to:
commercial or investment bank or money broker
development financial institutions or money lenders
insurance company
stock or futures brokers
pawn broker or hire purchase companies
debt factor or credit or debit card companies
investment or unit trust or venture capital company
39 39
Non Allowable Input Tax
Blocked input tax
passenger motor cars including hiring of car
Repair, maintenance and refurbishment of passenger motocar.
family benefits
club subscription fee
medical and personal accident insurance
medical expenses
entertainment expenses
40 40
Criteria To Claim Input Tax
Must hold valid document:
tax invoice
full tax invoice for any amount of tax payable
simplified tax invoice
• claim input tax up to a limit of RM30.00
tax invoice in the name of taxable person
tax invoice issued by approved person for Flat Rate Scheme
Customs No 1 for imported goods
Customs No 9 for goods removed from bonded warehouse
document to show claimant pays imported services
41 41
4
42
Apportionment Rules
No apportionment if can attribute wholly
full input tax if wholly attributable to taxable
supplies
no input tax if wholly attributable to exempt
supplies
Apportionment rules
HOWEVER
Input tax attributable on any exempt supplies of land
for general use is claimable if :---
made by a taxable person
such supply made to any public body(recipient)
such supply of goods by the taxable person is made in
compliance with the requirement enforced by any
public body
Inputs
used
Apportionment
rules apply
45 45
Apportionment Rules
Mechanism for input tax apportionment
Turnover-based method as a standard method for
apportioning any residual input
Value of taxable supplies
Taxable portion =
Value of all supplies
47
= RM4,364 47
Apportionment Rules
Interval
Fixed period of time during which the
proportional taxable usage of a capital
item is re-evaluated
Land and building - 10 intervals
Any other capital items - 5 intervals
Inclusive of both the first and final intervals
49 49
4
50
Adjustments
Adjustments to input tax and output tax
when the taxable person receives debit notes or issues
credit notes
bad debt relief
payment not received after 6 months (bad debts)
debtor has become insolvent before expiry of 6
months
payment not made for supply after six months
change of accounting basis
51 51
Adjustments
Adjustments due to credit note issued
credit note is issued when the amount previously invoiced is
reduced or a transaction is cancelled
supplier reduces output tax in the return for the taxable period
in which the credit note was issued
customer reduces input tax in the return for the taxable period
in which he received the credit note
Adjustments due to debit note issued
debit note is issued when the amount previously invoiced is
increased
supplier increases output tax in the return for the taxable
period in which the debit note was issued
customer increases input tax in the return for the taxable
52
period in which he received the debit note 52
Adjustments
Company A (seller)
sell goods on 20 June 2015 for RM2,500
accounts output tax : RM2,500 x 6% = RM150
received returned goods on 10 August 2015 (adjustment)
reduces output tax : RM530 x 6/106 = RM30
Company B (Buyer)
20 June 2015
claims input tax : RM2,500 x 6% = RM150
10 August 2015 (adjustment)
reduces input tax : RM530 x 6/106 = RM30
53 53
Adjustments
Adjustments due to bad debts
supplier is entitled to bad debts relief
supplier claims as input tax in the return for the taxable period
in which the bad debts are given relief
input tax amount to claim
A1
input tax = x C
B
where
A1 is the payment not received in respect of the taxable supply
B is the consideration for the taxable supply
C is the tax due and payable on the taxable supply
customer accounts as output tax in the return for the taxable
period in which the bad debts are given relief
54 54
Adjustments
Acompany makes a supply and issues a tax invoice for RM53,000
inclusive of GST on 10 January 2016
The company accounts RM3,000 as output tax.
On 5 May 2016, the customer pays RM42,400.
The balance of RM10,600 is unpaid.
RM10,600
input tax claimable = x RM3,000
RM53,000
= RM600
55 55
Adjustments
Adjustments due to payment received in respect of bad debts
customer makes payment in respect of bad debts
supplier accounts as output tax in the return for the taxable
period in which the payment is made
output tax amount to account
A2
output tax = x C
B
where
A2 is the payment received in respect of the taxable supply
B is the consideration for the taxable supply
C is the tax due and payable on the taxable supply
customer accounts as input tax in the return for the taxable
period in which the payment is made
56 56
Adjustments
Taking the earlier example:
On 5 August 2016, the customer pays RM8,480.
The balance of RM2,120 is still unpaid.
RM8,480
Output tax to be accounted = x RM3,000
RM53,000
= RM480
Customer claims RM480 as input tax
57 57
5
58
ACCOUNTING FOR GST
Time of Supply and Accounting Period
• Sale of uncompleted non-residential property under
progress payment by developers
account for GST at the various stages of the
progress / scheduled payment based on the earlier
a tax invoice has been issued or
payment is received
59
ACCOUNTING FOR GST
Time of Supply and Accounting Period (cont)
61
61
Time of supply rule
Actual Time
Tax invoice issued within 21 days
of supply
62
62
Time of Supply Rule
20 9 10
1 Jan Ordered Payment Invoiced Received
Mac Apr Mei
The ToS is treated as taking place at the earliest of the following events:
- The date when a tax invoice is issued
- The date when payment is received
The time of supply is – Date of payment on 20 Mac
63
63
Filing of GST Returns
Filing of Returns
GST returns and
payments to be
submitted not later than
the last day of the
month following the end
of the taxable period
Electronic filing is
encouraged
64
64
Filing of GST Returns
When to submit GST Return
monthly taxable period
65
65
Filing of GST Returns
GST charged on
Output Tax
taxable supplies
less
GST paid on
Input Tax
business purchases
equal
minus (-) plus (+)
Net GST
67 • GST refundable (4 – 2) 6
67
Filing of GST Returns
Sample of GST Return
Calculation of output tax
RM1,000,000
• Value of taxable supplies made 1
RM 60,000
• Output tax 2
RM 96,000
• Input tax 4
RM 36,000
68 • GST refundable (4 – 2) 6
68
Filing of GST Returns
GST Refunds
14 working days for electronic submission
28 working days for manual submission
69 69
Customs GST Seminar
GST UNIT
ROYAL MALAYSIAN CUSTOMS
DEPARTMENT
70
Briefing Agenda
71
1
Tax Code and
GST Return
72
TAX CODE FOR SUPPLY
73
TAX CODE FOR SUPPLY
ZRL 0% Local supply of goods and services which are subject to zero rated
supply.
• refer GST (zero rated) Order 2014.
E.g. Basic food ( rice, sugar, salt, wheat flour, cooking oil )
Live stock ( chicken, duck, eggs…etc )
74
TAX CODE FOR SUPPLY
Incidental Exempt Financial Supplies e.g.
ES43 0% • Deposit of money.
(N/A) • Exchange of currency.
• Loan to employees…etc.
Exempt supplies under GST e.g.
ES 0% • Supply of residential houses.
(N/A) • Supply of agriculture land.
• Supply of worker’s bus services.
76
TAX CODE FOR PURCHASE
ZP 0% Purchase from GST registered person with zero rated goods and
services.
77
TAX CODE FOR PURCHASE
78
TAX CODE FOR PURCHASE
TX- N43 6% Purchase with GST incurred directly attributable to non incidental
Exempt Financial Supplies.
• Purchase of wallpaper to be use for residential houses.
TX-RE 6% Purchase with GST which are not directly attributable to taxable or
exempt supplies.
• Utilities ( rental, electricity, water )
• Legal fees, audit fees,…etc.
83
2
Supply Spanning
GST
84
Supplies Spanning GST
Meaning of supply spanning GST
payment or invoice before appointed date and supply takes place on and
after appointed date e.g. sales of goods, airline tickets and cinema
General Rule
any supply before appointed date not subject to GST
any supply on or after appointed date subject to GST
Exception to the general rule
supply of warranty
provision of services where service tax has been charged
provision of goods where sales tax has been charged
non reviewable contracts
85
Supplies Spanning GST
86
3
Special Refund
87
Special Refund
88
Special Refund
Goods not eligible for special refund
goods allowed sales tax deduction under Section 31A Sales Tax
Act 1972 (credit system)
89
Special Refund
Manner to claim special refund
claim within 6 months from appointed date
for special refund < RM10,000 require audit certificate signed by
a chartered accountant
for special refund ≥ RM10,000 require audit certificate signed by
an approved company auditor
use special form to claim refund (manual or online)
to be given in eight (8) equal installments over a period of two
(2) years
to account as output tax if special refund is claimed and goods
are returned 90
91
Special Refund
Reduce special refund to 20%
(20% method)
purchase goods from non licensed manufacturers
goods are subject to sales tax
holds invoices which does not show sales tax has been
charged
claimant is a registered (mandatory) person
hold goods on appointed date for making taxable goods
92
Special Refund
20% method
reduce the actual purchase price by 80% for goods held on
hand on appointed date
Special refund = actual price x 20% x sales tax rate
Example:
Purchase RM15,000 of raw materials but holds RM10,000 on
appointed date
Special refund = RM10,000 x 20% x 10%
= RM200
93
4
Preparation By
Business
94
Business Preparation
GST Implication on Registration
pre-registration
registration exercise begins 6 months before date of GST
implementation
mandatory registration
to register 3 months before date of GST implementation
voluntary registration
input tax consideration
consumer profile
95
Business Preparation
GST Implication on Prices
identify existing suppliers
talk to small suppliers to get them registered
review procurement policy to avoid tax cascading
negotiate prices with suppliers to pass on saving
review sales price
pass on saving
absorption of GST
Price Control and Anti Profiteering Act 2011
96
Business Preparation
GST Implication on Stock Management
monitor business stocks
purchase strikes and lulls
procurement policy
registration and deregistration
special refund
physical stock take on hand
documents to support refund
audit certificate
97
Business Preparation
GST Implication on Cash Flow
need to analyse cash flow impact
cash recover from customer before GST is due
assess the need to provide for one time fund to cater for
GST payment upfront
review credit terms to customers
99
Business Preparation
GST Implication on Input Tax
input tax credit
apportionment of input tax
annual adjustment (partial exemption)
Capital Goods Adjustment
blocked inputs not claimable
incidental financial supplies
claim > RM500 to be supported by full tax invoice
100
Business Preparation
GST Implication on Contracts
avoid long term contract without legal review
absorption of GST
pricing strategy to pass on saving
GST Implication on Human Resource
upgrade staff understanding of GST
avoid unnecessary mistakes
false information may open to audit case
review policy on fringe benefits
101
Business Preparation
GST Implication on System
perform complete mapping of transactions to identify required
changes and GST liability
use of online submissions to tax agency
computerised system
system processes
print receipts with GST amount
issue GST invoice
claim for refunds and bad debts
prepare GST returns and make adjustments
approach - internally, vendor, COTS
102
Thank You
For Enquiries, please contact:
1300-88-500
03-8882 2111
www.gst.customs.gov.my
Email: gst@customs.gov.my
Fax: 03-7806 7599
103