GST SEMINAR FOR FOMFEIA

Transcription

1 GST SEMINAR FOR FOMFEIA Accounting For Tax 1 April am -2.30pm New York Hotel, Johor Bahru Norlela Hj Ismail Unit GST, Putrajaya PEJABAT PELAKSANAAN GST KEMENTERIAN KEWANGAN

2 Briefing Agenda 1. Charging Output Tax 2. Entitlement of Input Tax 3. Apportionment Rules 4. GST Adjustments 5. Taxable period 6. Submission of GST Return 7. Payment of Tax 2

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4 Input tax and Output tax INPUT Goods (raw materials, machines and other goods) Services (rental telephone and insurance) Utilities (electricity and water) GST on inputs = Input tax Business Claimed input tax GST on outputs = Output tax OUTPUT Goods (e.g. furniture, tableware, television) Services ( e.g. loan of mould 4

5 Output Tax Scope and charge GST is charged on the taxable supply of goods and services made by a taxable person in the course or furtherance of business in Malaysia GST is charged on imported goods 5

6 Output Tax GST charged on taxable supplies (sales of goods / services) deemed supplies disposal of business assets private use of business asset imported services payment not paid to taxable person for purchases made after 6 months gifts costing more than RM 500 6

7 Disposal of Assets Sale of capital assets, other than TOGC subject to GST Sale of assets as TOGC not subject to GST (not a supply) Given free the value will be the open market value subject to GST (>RM500) Sell as scrap the value will be the sale value of scrap subject to GST 7

8 Imported Services Malaysia IT Tex_.UK ABC Sdn.Bhd (Taxable person) Value of Services = RM10, GST = 6% X RM10,000 = RM600 GST-03 OUTPUT TAX = RM600 Port overseas INPUT TAX = RM600 8

9 Output Tax Supplies which may not be 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 going concern (TOGC) contribution to pension, provident or social security fund supplies by any society or similar organisation supplies excluded from input tax credit 9

10 Issuance of Tax Invoice Types of tax invoice when making taxable supplies full tax invoice simplified tax invoice 10

11 Serial number Supplier, name, address & Identification number The words tax invoice in a prominent place Date of invoice Name and address of person being supplied Sufficient description The total amount payable excluding tax, the rate of tax and the total tax chargeable shown as a separate amount. The total amount payable including the total tax chargeable

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13 Simplified Tax Invoice Statement Price inclusive of GST 6% need to be printed here The total amount payable including GST 6% 13

14 More sample Supplier Identification? Date of invoice Sufficient description The total amount payable including tax 14

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16 Supplies taxable supplies Allowable Input Tax standard rated or zero rated supplies disregarded supplies (supplies within group, supplies made in warehouse) supplies made outside Malaysia which would be taxable supplies if made in Malaysia any other prescribed supply (Fixed Input Tax Recovery) 16

17 Group Registration Inputs: Raw materials, Utilities, commercial buildings Supplies to any members are treated as supplies to representative member Group member Supplies between groups are disregarded Group Representative Submission of GST return and payment to Authority Group member Group Registration 17

18 Warehousing Scheme A Inputs: Forklift charges, storage charges C Declares supply and pays GST B 18

19 Supplies Made Outside Malaysia B Factory Inputs: office rental, utilities, office furniture Purchase clothes A Operational Headquarters Supplies clothes issue invoices C 19

20 Fixed Input Tax Recovery computer, commercial buildings, office furniture Exempt supplies (business) Input tax based on fixed rate Recovery Taxable supplies (fee based services) utilities, audit, telecommunication security services, Exempt supplies (non business) 20

21 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 21

22 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 22

23 Input Tax Credit Prerequisite for ITC: Claimant must be a taxable person Must have a valid tax invoice full tax invoice simplified tax invoice - claim the input tax up to a limit of RM30.00 if name and address of recipient is not stated in invoice (GST at 6%) invoice issued by approved person under Flat Rate Scheme Customs No 1 /Customs 9 (imported goods) document to show claimant pays imported services Invoice issued under the name of the claimant Goods and services acquired are not subject to any input tax restriction e.g., motorcars Good and services are acquired for the purpose of making taxable supply 23

24 Input Tax Mechanism Input Tax Credit Tax paid on inputs to be offset against the output tax in the relevant taxable period Subject to a time limit of 6 years from the date of return required to be made Apportionment rule to apply for a mixed supply Refund to be offset against other unpaid GST, customs and excise duties Net tax to be refunded within 14 working days for on-line submission 28 working days for manual submission 24

25 Non Allowable Input Tax Blocked input tax passenger motor cars including hiring of car family benefits club subscription fee medical and personal accident insurance medical expenses entertainment expenses for family members and potential clients 25

26 Blocked Input Tax Passenger motor car adapted for carrying not more than 9 passengers including the driver unladen weight of which does not exceed 3000kg Exclusion public service or tourism motor cars hire and drive cars or cars for sale by second hand dealers cars used for driving instructional purposes cars forming part of stock in trade cars used exclusively for business purposes approved by Director General 26

27 Blocked Input Tax Family benefits any benefits (including hospitality of any kind) provided by the taxable person for the benefit of any person who is the wife, husband, child or relative of any person employed by the taxable person for the purposes of any business carried on or to be carried on by the taxable person 27

28 Blocked Input Tax Club subscription fee any joining fee, subscription fee, membership fee, transfer fee or other consideration charged by any club, association, society or organization established principally for recreational or sporting purposes or by the transferor of the membership or such club, association, society or organization 28

29 Blocked Input Tax Medical and personal accident insurance Any payment or contribution for insurance contracts:- To insure and cover the cost of medical treatment as well as cost of personal accident in which the insured is any person employed by the taxable person 29

30 Blocked Input Tax Medical expenses any medical expenses in connection with the provision of medical treatment to any person employed by a taxable person Entertainment expenses Spouse or family members Potential clients Employees Clients 30

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32 Apportionment Rules Apportionment rules (first level) Apportionment between business and non-business Apportionment rules (second level): Applicable when goods and services are used for both taxable and exempt supplies (mixed supplier) 32

33 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 applicable when goods and services are used for both taxable and non-taxable supplies 33

34 Apportionment Rules Inputs used Wholly attributable to taxable supplies Wholly attributable to exempt supplies Claim 100% input tax Attributable to both taxable and exempt supplies Cannot claim input tax Apportionment rules apply 34

35 Apportionment Rules Mechanism for input tax apportionment Turnover-based method as a standard method for apportioning any residual input Taxable portion = Value of taxable supplies Value of all supplies round up or down to the nearest two decimal places Input tax claimable = Taxable portion X Residual input tax 35

36 Apportionment Rules Example: Taxable supplies = RM300,000 Exempt supplies = RM250,000 Residual input tax = RM8,000 RM300,000 Taxable portion = RM300,000 + RM250,000 = % = 54.55% (2 decimal places) Input tax claimable = 54.55% X RM8,000 = RM4,364 36

37 Apportionment Rules Standard method must reflect correct proportion to which the inputs are put to use if does not reflect correct proportion, use alternative methods floor space method transaction based method input based method cost centre accounting method employee time method use of alternative methods requires prior approval 37

38 Apportionment Rules Example: A finance company Arus Sdn Bhd. deals in taxable leasing and exempt personal loans services. The value and number of transaction of taxable and exempt supplies are as follows: Activities No. of Transactions % Value (RM) % Leasing agreements entered into , Personal loans entered into ,000, TOTAL ,750,

39 Apportionment Rules De Minimis Limit Exempt input tax can be recovered in full if the total value of exempt supply is less than a prescribed amount Prescribed amount total value of the exempt supplies does not exceed Example: an average of RM5,000 per month and not exceeding 5% of the total value of total supplies (all taxable and exempt supplies) made in that period Factory provides transport (workers bus) to his workers for a charge 39

40 De Minimis Limit Example 1 : A manufacturing company provides bus transportation to its workers and charges them. Activity Taxable Exempt % Value (RM) 150,000 4, Full recovery of input tax allowed 40

41 De Minimis Limit Example 2 : A manufacturing company provides bus transportation to its workers and charges them. Activity Taxable Exempt % Value (RM) 500,000 10, Full recovery of input tax are not allowed, have to apply apportionment rule on ITC Residual Input Tax Taxable Supplies Exempted Supplies ITC Claimable Total Input Tax RM500 RM500,000 RM10,000 98% RM

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43 Adjustments Adjustments to input tax and output tax when the taxable person issues debit notes or credit notes 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 43

44 Adjustments Credit note & Debit note Adjustments due to credit note issued credit note is issued when the amount previously invoiced is reduced or a transaction is cancelled Supplier, already accounted for output tax, reduces output tax in the return for the taxable period in which the credit note was issued buyer, already claimed input tax, 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 has to increase output tax in the return for the taxable period in which the debit note was issued buyer has to increase input tax in the return for the taxable period in which he received the debit note 44

45 Credit note & Debit note adjustment Adjustment Supplier Recipient In relation to Adjustment method When: In GST Return for Adjustment method When: In GST Return for Credit note Reduce output tax The taxable period where CN is issued Reduce input tax Taxable period where CN is issued Debit note Increase output tax The taxable period where DN is issued Increase input tax Taxable period where DN is issued 45

46 Bad debt Bad Debt Relief entitle to relief on bad debts if the taxable person has not received any payment or part of payment in respect of the taxable supplies Conditions to apply relief GST has been paid has not received any payment or part payment 6 months from the date of supply or the debtor has become insolvent before the period of 6 months has elapsed sufficient efforts have been made to recover the debt 46

47 Adjustments Bad debts Adjustments due to payment not received 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 output tax paid, claim as 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 account as output tax in the return for the taxable period in which the bad debts are given relief 47

48 Adjustments Bad debts Adjustments due to payment received in respect of bad debts supplier has made the claim for bad debt relief subsequently customer paid the debt 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 claim as input tax in the return for the taxable period in which the payment is made 48

49 Adjustments Bad debts Adjustment Supplier Recipient In relation to Adjustment method When: In GST Return for Adjustment method When: In GST Return for Bad debt relief (Payment NOT received) Increase input tax The taxable period when bad debt relief is claimed Increase output tax The taxable period where the 6 th months from time of supply occurred Recovery of bad debt (Payment received) Increase output tax The taxable period when payment is received Increase input tax The taxable period when payment is made 49

50 Other Adjustment Capital Goods adjustment Applicable for mixed suppliers only Criteria : Value of the goods (exclusive of tax) RM100,000 Used in the course or furtherance of a business The goods can be capitalised under GAAP goods other than properties = 5 successive intervals Properties = 10 successive intervals First interval commence on the day of supply and end on the last day of that tax year Subsequent interval correspond with the tax year *Tax year is the financial year of the taxable person 50

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52 Taxable period Regular interval period where a taxable person accounts and pays GST to the government The taxable period will be determined at the time when the GST registration is approved quarterly basis for businesses with annual turnover not exceeding RM5 million monthly basis for businesses with annual turnover exceeding RM5 million A taxable person may apply to be placed in any other category other than his pre-determined taxable period 52

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54 Submission of GST Returns Filing of Returns GST returns and payments must be submitted not later than the last day of the month following the end of the taxable period Electronic filing is encouraged 54

55 Submission of GST Returns GST Return must be submitted for any condition as follows: Payment : output tax > input tax Refund : output tax < input tax No payment : output tax = input tax no output tax, no input tax (nil return) Return not submitted an offence 55

56 Submission of Tax Return 56

57 Submission of GST Returns When to submit GST Return monthly taxable period quarterly taxable period 57

58 Submission of GST Returns GST charged on taxable supplies less GST paid on business purchases equal Output Tax Input Tax minus (-) Net GST plus (+) Refund to taxable person Pay GST to Government 58

59 Submission of GST Returns Sample of GST Return Calculation of output tax Value of taxable supplies made Output tax Calculation of input tax Value of taxable supplies received Input tax Net tax payable/refundable GST payable (2 4) GST refundable (4 2) RM1,000,000 1 RM 40,000 2 RM 600,000 3 RM 24,000 4 RM 16,

60 Submission of GST Returns Sample of GST Return Calculation of output tax Value of taxable supplies made Output tax Calculation of input tax Value of taxable supplies received Input tax RM1,000,000 1 RM 40,000 2 RM1, 600,000 3 RM 64,000 4 Net tax payable/refundable GST payable (2 4) 5 GST refundable (4 2) RM 24,

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62 payments must be submitted not later than the last day of the month following the end of the taxable period Payment of tax may be made at JKDM office, in person cheque, bank draft, postal order, money order 62

63 Cont.. Payment of tax may be made.. over the counter at dedicated bank cheque, bank draft by post cheque, bank draft, postal order by electronic means Internet banking, FPX (financial processing exchange) 63

64 Thank You Pejabat Pelaksanaan GST Kementerian Kewangan Malaysia Norlela Hj Ismail GST Unit Royal Malaysian Customs