GST SEMINAR: FOMFEIA Accounting For Tax ate : 4 Mac 2014 lace: Hotel Hatten Melaka
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 2
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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
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
Output Tax GST charged on taxable supplies (sales of goods or services) deemed supplies disposal of business assets private use of business asset imported services goods sold in satisfaction of a debt gifts costing more than RM 500 6
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 contribution to pension, provident or social security fund supplies by any society or similar organization supplies excluded from input tax credit (exempt supply) 7
Issuance of Tax Invoice Types of tax invoice when making taxable supplies full tax invoice simplified tax invoice 8
e-business Sdn Bhd No. 007 1000 Jalan Tipu, Bandar Reka Negeri Sembilan Serial number Supplier, name, address & dentification number No. Tel. : 06-7915566 TAX INVOICE GST No. : 01234567 Invoice Date : 7 th. July, 2015 The words tax invoice in a prominent place Name and address of erson being supplied Sufficient description Invoice to:- SYARIKAT ABC Jalan 5/6, Kelana Jaya Selangor Send to:- SYARIKAT ABC Date Your Order Our Order Sales Rep. 30 th. June, 2015 1123 123 ABC RAMBO No. Item Unit Description Discounts Taxable Unit Price (RM) Total Price (RM) 1. 117711 10 Box - 6% 100 1,000 2. 117712 100 Pencils - 6% 1000 100,000 Subtotal 101,000 Discount 1,000 Subtotal 100,000 CONFIRMATION BY 30 DAYS GST 6% 6,000 E.OE SIGNATURE. Total 106,000 Date of invoice 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 9
Example of Tax Invoice for Mixed Supplies Name, address of supplier Syarikat Pemaju Hartanah Sdn Bhd TAX Tax Invoice No. 00779 Lot 123, Jalan Meru, 43120 Klang Selangor INVOICE in a prominent place GST No. : 0001111 Serialized tax invoice number No. Tel. : 03-67868686 TAX INVOICE Invoice Date : 7 th. July, 2016 GST Registration number Name, address of customer Invoice to:- SYARIKAT MANA DIA Jalan 7/7, Ipoh Perak No. Description Quantity Unit Price (RM) Total Price (RM) 1. Shop houses (6% GST) 2 350,000 700,000 2. Double story terrace houses (exempt) 10 250,000 2,500,000 Subtotal 3,200,000 Date of invoice Total charge made excluding GST Description of goods supplied Quantity of goods Rate of GST Add GST @ 6% 42,000 Total Sales 3,242,000.. SYARIKAT PEMAJU HARTANAH SDN BHD Total charge made including GST 10
Other Examples of Tax Invoice C SERVICES & TRADING GST REG. 1234-567 Supplier Identification Sufficient description 30, Jalan 37, Taman Awam Phone : 03-87066078 BANDAR BARU SALAK JAYA Fax : 03-87066079 43900 SEPANG E-mail : someone@yahoo.com CASH SALE No. Item Units Description Unit Price Total 1 2022 1 Plasma TV Somy 56 inches Invoice No : 11209 Date : 12.11.2015 8999.00 8999.00 Price 8999.00 Discount 500.00 Subtotal 8499.00 Price inclusive of GST 6% (RM509.94) Total 9008.94 Date of invoice The total amount payable including tax Issued by : juali 11
SIMPLIFIED TAX INVOICE (TAXABLE SUPPLIES 2 rates) Supplier s name, address and GST identification number Date of Tax Invoice Description of goods or services supplied AGRO SHOPPING CENTRE SDN BHD DESA PINGGIRAN PUTRA, SG. MERAB TEL: 03 8896XXXX FAX: 03 896XXXX GST Reg. No : Date: 30/3/2016 15:35:45 Invoice No: V001619 BISCUITS PNKL [PACK] 1 3.90 3.90 S 010611 PRINGLES SC 182G [PCS] 1 6.90 6.90 S 001002 SUGAR 2 1.45 2.90 Z 123235 Item Count 4 Total Sales Inclusive GST @ 6% 14.35 Rounding Adjustment 0.00 Cash 15.00 Balance Rate of GST 0.65 GST analysis Goods Tax S = 6% 10.80 0.65 Z = 0% 2.90 0.00 Tax invoice serial number Indicator for standard rated supply Indicator for zero rated supply Total amount payable including GST Print : 30/3/2016 Salesperson : Aminah Total amount of GST charged 12
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Allowable Input Tax Supplies taxable supplies standard rated or zero rated supplies disregarded supplies (supplies within group, supplies made in warehouse, supplies between venture operator and venturers and supplies between toll manufacturer and overseas principal) supplies made outside Malaysia which would be taxable supplies if made in Malaysia any other prescribed supply (Fixed Input Tax Recovery) 14
Supplies Made Outside Malaysia B Factory Inputs: office rental, utilities, office furniture Purchase clothes A Operational Headquarters Supplies clothes issue invoices C 15
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) 16
Allowable Input Tax Incidental exempt 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 17
Incidental Exempt Financial Supplies Special tax treatment does not apply to: banks 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 18
Input Tax Credit Input Tax Mechanism 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 19
Input Tax Credit Conditions: 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 20
Non Allowable Input Tax Blocked input tax passenger motor cars including hiring of car 21
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 22
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 23
Blocked Input Tax medical and personal accident insurance 24
Blocked Input Tax Medical expenses any medical expenses in connection with the provision of medical treatment to any person employed by a taxable person 25
Blocked Input Tax Entertainment expenses Spouse or family members Employees Potential clients Clients 26
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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 28
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 29
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 30
Apportionment Rules RESIDUAL INPUT TAX input tax that is attributable to making both taxable and exempt supplies Eg. A train company that supplies both taxable supply ie. freight services and exempt supply ie. passenger transportation. INPUT TAX ATTRIBUTED TO :- Taxable supply freight services TYPES OF INPUTS Repair service to the freight coach or wheels Exempt supply passenger transportation Both supplies (taxable and exempt) Train seats, television, curtains, bunks, etc. Electricity, water, maintenance services, telecommunication services 31
Example: Apportionment Rules Taxable supplies = RM300,000 Exempt supplies = RM250,000 Residual input tax = RM8,000 RM300,000 Taxable portion = RM300,000 + RM250,000 = 54.5454% = 54.55% (2 decimal places) Input tax claimable = 54.55% X RM8,000 = RM4,364 32
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 base method cost centre accounting method employee time method use of alternative methods requires prior approval 33
Example: Apportionment Rules 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 75 60 750,000 42.9 Personal loans entered into 50 40 1,000,000 57.1 TOTAL 125 100 1,750,000 100 34
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: Apportionment Rules 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 35
De Minimis Limit Example 1 : A manufacturing company provides bus transportation to its workers and charges them. Activity Taxable Exempt % Value (RM) 150,000 4,000 2.6 Full recovery of input tax allowed 36
De Minimis Limit Example 2 : A manufacturing company provides bus transportation to its workers and charges them. Activity Taxable Exempt % Value (RM) 500,000 10,000 2.0 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% RM490.00 37
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Adjustments Adjustments to input tax and output tax when the taxable person receives debit notes or issues 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 change of use of assets (from exempt to taxable) change of accounting basis (e.g., payment basis to invoice basis) annual adjustment for mixed supplier Capital Goods Adjustment for mixed supplier (change in the proportion of use) 39
Adjustments Credit 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 40
Adjustments Credit note Example : Goods sold on 20.1.16 by company A to company B, amount RM1,000 plus GST 6%. Goods returned on 12.2.16 to company A, amount RM210 (inclusive GST). Credit note issued on 26.2.2016 by company A {assuming company is in monthly taxable period} Company A (seller) Output tax: RM1000 x 6% = RM60 (Jan 2016 return) Adjustment to reduce output tax (Feb 2016 return) RM210 x 6/106 = RM11.89 Actual GST paid to Customs is RM48.11 Company B (buyer) {assuming company is in monthly taxable period} Input tax: RM1000 x 6% = RM60 (Jan 2016 return) Adjustment to reduce input tax (Feb 2016 return) RM210 x 6/106 = RM11.89 Actual input tax claimed by Co. B is RM48.11 41
Adjustments Debit 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 42
Adjustments Debit note Example : Goods sold on 20.1.16 by company A to company B, amount RM1,000 plus GST 6%. Debit note issued on 26.2.2016 by company A for transportation charges for delivery of the goods, amount RM105 (inclusive of GST). {assuming company is in monthly taxable period} Company A (seller) Output tax: RM1000 x 6% = RM60 (Jan 2016 return) Adjustment to increase output tax (Feb 2016 return) RM105 x 6/106 = RM5.94 Actual GST paid {output tax} to Customs is RM65.94 Company B (buyer) {assuming company is in monthly taxable period} Input tax: RM1000 x 6% = RM60 (Jan 2016 return) Adjustment to increase input tax (Feb2016 return) RM105 x 6/106 = RM5.94 Actual input tax claimed by Co. B is RM65.94 43
Adjustments Bad Debts 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 output 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 account as output tax in the return for the taxable period in which the bad debts are given relief 44
Adjustments Bad Debts Payment not received ARUS Sdn Bhd made a supply and issued a tax invoice on 5.2.16 to RBS Sdn.Bhd for RM21,200 inclusive GST 6% (RM20,000+RM1,200 GST). Tax has been accounted by ARUS Sdn Bhd for the month of Feb. Part payment of RM12,000 (inclusive of GST RM679.25) for the supply was received on 12.5.16. Balance payment was not received after six months from the date of tax invoice issued. ARUS can claim bad debt relief by accounting as input tax in his August return. The claimable bad debt relief is as follows:- RM 9,200 x RM1,200 = RM 520.75 RM21,200 45
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 46
Adjustments Bad Debts Payment received after six months Please refer to the same example of ARUS Sdn Bhd. Assuming the customer pays the balance of RM 9,200 (inclusive tax of RM520.75) on 5.11.2016 (after the expiry of 6 months from the date of supply). ARUS must account for output tax calculated as follows:- RM 9,200 x RM 1,200 = RM 520.75 RM21,200 47
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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 49
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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 51
Submission of GST Returns 52
Submission of GST Returns When to submit GST Return monthly taxable period quarterly taxable period 53
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 54
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 16,000 5 6 55
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 24,000 6 56
Comments and Enquiries i) Ketua Setiausaha, Perbendaharaan Malaysia Pejabat Pelaksanaan GST Komplek Kementerian Kewangan, No.5, Persiaran Perdana, Pusat Pentadbiran Kerajaan Persekutuan Malaysia, 62596 PUTRAJAYA. Tel : 03-88823000 ii) GST PORTAL www.gst.customs.gov.my iii) Customs Call Centre (CCC) Tel: 03-78067200 Fax: 03-78067599 Email: ccc@customs.gov.my 57
End of Presentation Thank You GST Special Task Force Unit Royal Malaysian Customs Department Putrajaya 58
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