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    GST Seminar Notes

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    © All Rights Reserved
    Download as PDF or read online from Scribd
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    40 views66 pages

    GST Seminar Part 2 of 2

    Uploaded by

    a96lhf
    GST Seminar Notes

    Copyright:

    © All Rights Reserved
    Download as PDF or read online from Scribd
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    of 66
    EMPLOYEE BENEFITS. GIF not stated in. contract of employment, taxable goods provided free: to: employees are subject to GST (subject to RMS00 gift rule). TC claimable 1. Output tax need not be accounted for zero rated, exempted or blocked input tax goods. IG input. tax incurred: for: zero rated goods given free’ is daimable (not for exempted or blocked input tax goods} Services supplied free ¥ No GST to be charged ¥ input tax claimable Note: There is no liability to account for output tax for any services provided free to employees because itis not regarded a supply V However, services provided free to a connected person & the connected, person s not entitled fora credit isa supply of services as EMPLOYEE BENEFITS OGift rule Any goods worth RMSOO or less given to the same person in the same year ¥ Isnot a supply ¥ Is not subject to GST ¥ Can claim Input Tax {No restriction on series of gift as long do not >RMS500 in same year) Exempt supplies - staff transportation or accommodation Company A rewards RM5,000 to his best employee of the year > not subject to G6ST > money is neither goods nor services (Sec 2 of GST ACT 2014) al 78 EMPLOYEE BENEFITS. ides fee desing service’ tothe 1 Cleaning ° services’ company | # le Nota SY company es few! ee tie - rentals be claimed as: Exception: I company provides trans Is an exempt Supply. IC for GST incurred in renting buses cannot be claimed WLusTRanow a: Excel company provides fre cleaning services tothe home of a business partner “Services provided free to connected person is deemed to be 4 supply + Subject to GST 1 conditions: rules of RMS00 TRADE SAMPLE G Imported trade sample given relief under GST Relief Order Semple Ae ‘iin Q Trade samples given for promotion not subject to GST on ¥ packed differently and labelled ‘sample’ or ‘not for sale” Y samples not packed differently is subject to business gift 79 INCIDENTAL EXEMPT FINANCIAt SUPPLIES (Q_Can claim input tax on financial supplies (a5 if Input Tax attributable to taxable supplies) deposit of money exchange of currency holding of bonds or other debt securities transfer of ownership of securities VRS provision of loans, advance or credit to employees or connected persons « assignment of provision of trade receivables < holding or transfer of trust unit Y hedging of interest, commodity, utility or freight risk ny 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 SARL NA investment or unit trust or venture capital company 80 APPORTIONMENT OF INPUTTAX Q ITC not available if input tax attributable to exempt supplies F 7 © Full ITC claimable if input tax wholly attributable to taxable supplies OQ APPORTIONMENT RULES: Y apportionment between business and non- business e.g. such as business assets used for non business (including private use) and business use Y Apportionment between goods and services used for both taxable and non-taxable supplies APPORTIONMENT ‘Wholly ttributable to taxable supplies Wholly attibutable to ‘exempt supplies Gaim 10056 fo input. iment rules apply MECHANISM FOR INPUT TAX APPORTIONMENT. O) Tumover baséd method (Standard Method] for apportioning residual input | TAXABLE PORTION = VALUE OF TAXASLE SUPPLIES VAWUE OF ALL SUPPLIES suuusTRATION: ‘Terabe Supplies £300,000 (attributable Input Tax = 12,000) ‘Exempt Supplies = RI 700,600 (Attributable Input Tax = 30,000) Reside Input tox 1a, 000 Tanablé portion = __\-Rigoo.o0n ~~ x 100% Fax300,000 + fM700000 30% Input tax laimable 30% x RMB,000= RM2 400, {R122,000 + RIv2,400) » RM44,400 Total ITC claimable ee DE MINIMIS LIMIT De Minimis Limit - sec.39(2)(a) & *€xempt input tax can be recovered in full ifthe total value of non- taxable supply (directly attributable plus the exempt proportion of any residual input tax) is less than a prescribed amount f *Prescribed amount of de minimis limit ¥ total value of the exempt sup) > an average of RMS,000 per month and does not exceed > not exceeding 5% of the total value of total supplies (all taxable and exempt supplies) made in that period 82 B "REFUND OF INPUT TAX CREDIT [——__$_— rr G_. Refuiid allowed if Input tax exceeds Output Ta ¥ _ 28working days for manual submission~. ¥ 14.working days for online submission— WITHHOLD INPUT TAX CREDIT (Section 38(5)) Where at the énd of any taxable period any amount is due under subsection {), the Director General may withhold payment of the amount if-— (a) the taxable person fails to furnish the return under section 42 or to provide ‘ny information os required by the Director General; or (6) the Director General has reasonable grounds to believe that the amount should not be the amount due to the person OFFSETTING INPUT TAX CREDIT (Section 46) > DG may set off any amount of tax due and payable under this Act or any amount of customs duty or excise duty against the unpaid amount : ee REPAYMENT OF INPUT TAX (SEC. 38(9) & (10) © Repay Input tax + IF fails to pay the consideration within 6 months from date of supply but has claimed input tax + as output tax account in the taxable period covering the month after the 6 months period racpmmis ILLUSTRATION: PURCHASER FAILS TO PAY SUPPLIER 83 REPAYMENT OF INPUT TAX (SEC. 38(9) & (10) | ‘The purchaser is entitle to claim the output tax paid: + if subsequently has paid consideration to supplier as input tax ; : + account in the taxable period covering the month in which payment is. made ILLUSTRATION: ‘entme oCam AS INPUT TAX ACCOUNTING BASIS ‘Section 37 of the GST ACT 2014 “Accounting basis” “(1) For the purposes of section 41, every taxable person shall account for tax in accordance with the time of supply under sections 11, 13, 70, 72 and 73." A= Me” Q Taxable person shail account for GST on an accrual or invoice basis (in accordance with time of supply rules) G1 WoS sets the GST mactanism & crystallizes GST liabil ies ACCOUNTING FOR TAX ON INVOICE BASIS: ¥_ GST accounted on date of invoice or payment is received whichever is earlier Claim input Tex on the date of tx invoice (even if payment received eater) 707? “RDVANTAGES. DISADVANTAGES Claim GST input betore payment to > Account for GST Output even before supplier receiving payment from customers > taxable person may face cash flow problems > Can account for sales & purchase lwansactions easily | 85 ACCOUNTING BASIS ACCOUNTING FOR TAXON PAYMENT-BASIS: (Sec. 3702) 06 may approve application to account for tax an a payment basis effective for a pariod of 3 years only and subject to extension GST accounted on date of payment or other consideration is received Payment basis applicable only to () Public Body; or (i) certain groups ¢.g small. business, retailers, restaurants etc substantially rade on cash basis & maintain cash accounting system Cla input Tax on the date of payment or other consideration is received > Facilitates smallbusinesses such as... | > Claim GST Input only after payment retailers ; recéived > Facilitate cashflow > More supervision by tax authorities CHARGING OUTPUT TAX ACCOUNTING FOR OUTPUT TAX: GST is charged on Y Taxable supplies (sales of goods / services) Y Deemed supplies > private use of business assets disposal of business assets imported services goods sold in satisfaction of debt gifts costing more than RMS00 86 TAXABLE PERIOD TAXABLE PERIOD TAXABLE PERIOD - Section 40 of the GST ACT 2014 Taxable period is a regular interval whore a taxable person accounts and pays GST = Todetermine at the time when the GST registration is approved > Quarterly basis for businesses with annual turnover betow RMS million > Monthly basis *+ for businesses with annual turnover RMS million and above > Six months basis + special cases > Default taxable period is quarterly taxable period ‘A taxable person may apply to be placed in any other category other than his predetermined taxable period. 87 FILING GST RETURNS — TAXABLE PERIOD When to submit GST Return. monthly taxable period TAX INVOICE 88 TAX INVOICE Section 33 of the GSTACT 2014 “ssuance of tox invoice” _"(2) Except of otherwise provided in this section, every registered person who makes-any toxable supply of goods or services in the course or furtherance of any business ia Malaysia shall issue a ‘tox invoice contoining the prescribed particulars in respect of the supply. (2)Any registered person who— (0) foils to issue a tox ivolce, or (0) Issues 0 toxinvaice which does not contain eny of the prescribed particulars, commits on offence TYPES OF TAX INVOICE _Taxinvoice can be classified as follows:- > Full Tax invoice > Simplified Tax invoice > Self-Billed invoice Tax invoice is an important document needed for the effective operation of the GST system. Registered person must issue a tax invoice on every supply of goods and services that are standard rated at 6%. Tax invoice is a document similar to a commercial invoice & contains information such as-GST rate, registered person & supply and the amount of GST payable. Tax invoice is essential evidence to: “trigger the time of supply for a transaction “to record creditable acquisitions to support an input tax credit claim ‘determine when taxable person may claim input tax ‘determine which supplies to be included in a particular taxable period Olssuance of Tax invoice: ‘must be issued within 21 days from basic ToS (See. 11(5)), only issued by a registered person & original copy retained by customer ‘ean be Issued electronically or printed form certified true copy if tax invoice is lost or misplaced Issued in Ringgit Malaysia (RM) KAKNN 89 FULL TAX INVOICE Following particulars are required in the full tax inv 4) the words “tax invo ijthe taxinvoice in serial number iilthe date of issue of the tax invoice ivjname of supplier, address and GST iden vithe customer's name (or trading name) and address vila description identifying the goods or services supplied vilfor each description, you must show the quantity of goods or the extent of the services.and amount payable, excluding GST viliJany discount offered ixjthe total amount payable excluding GST, the rate of tax and the total tax chargeable shown as a separate amount xitotal amount payable including the GST charged; and xijany amounts referred to in (vii) and (ix) must be expressed in Malaysian currency thane ads eater oomereezons race ne on ae brows waco Shae Sen tna AECSentE a TAXINVOICE ——____| a kang, or Toston 3] sescronon [aunmiv] owt | Tome nome & PRICE (ray Earpiece] Sas ot — - 7 [rae ooo — [oom ae Deseipn of 2 [rshos ao [enon __| revo goods / Sn 1200.00 Eine 3 [eRe 10. [9000 —[on00 —|// [ Totaramocnt oo pu ‘sant 2ac000 |) eacBe2l oy Dscoun 0% | 0c Takis to inaieh ase Soa Toate 6st | 160000 3 [semseary Ee) a | ee ———— The: ‘Total 1694.80, Lez J td + est@o% soes |" Tatalamount | ro) a. Ssreo% pie ‘Taxable supply. = (RM500 + RMM1200) @ 10% discount, fngefiog O57 = ranso @ on» RM91.80 TAX INVOICE O) Tax Inclusive : > Usually n retall business its practical to receive consideration inclusive of GST > Tax invoice should stow the GST as a separate amount > State the GST inclusive price & indicate “price inclusive of GST” xample: Assuming consideration for supply is RM1000.00 GST = Price x Tax fraction = RNAIO00.00 6/106 = RMISE.60 Tex Fraction: > Taxtraction is the GST amount of the consideration. Calculation as follows : Yo Taxfrnction= _ Gsrrate x amount of consideration 100%+ GST rate Example: Assuming consideration for supply is RN1000.09 os 6% x RM1000.00 200% + 6% MS6.60 TAX INVOICE 1 Tax Exclusive : > Tax exclusive would be in reference to the amount of GST pald 2s shown inthe tax Invoice with separate GST amount fbample: Assuming consideration for supply is RN2O00.00 GST 6% = Price x Rate of Tax = RIMI000 x 6% = RIMGO.00 Note: Customer wil be charged RM2000,00 + RMGD.00 = RM11060.00 {GST RNMG0.00 will be remitted to the government 91 SIMPLIFIED TAX INVOICE > In. situations where it iS impracticable to issue a full tax invoice with all the prescribed particulars, the DG may allow a registered person to issue a simplified taxinvoice > Generally-the approval for. simplified tax invoice is given only for retailers who normally generate large volume: of invoices daily to end consumers e.g hyper markets, mini markets, supermarkets, parking operators, restaurants, petrol kiosks. and other point of sales outlets This invoice can be issued regardless of any value of sales | > itil exclude the following prescribed particulars; ¥ name & address of the recipient; and the price and tax for each item to be shown separately Q FoR PURPOSE OF CLAIMING ITC Y The purchaser can use simplified tax invoice if total amount payable (including GST) does not exceed RMS00.00 ¥ If total amount payable (including GST) exceeds RMS00.00 the purchaser must request for full tax invpice SIMPLIFIED TAX INVOICE QA simplified tax invoice can take the form of an invoice, receipt, voucher or any other similar document provided it has all the required information as follows: i)the name, address and GST identification number of the supplier ii)the date of issuance of the tax invoice ilijthe tax invoice serial number ivja description sufficient to identify the goods or services supplied v)the total amount payable including the total tax chargeable for each rate of tax chargeable, the gross amount payable including tax and the tax rate applicable. 92 rE RECIPIENT CREATED TAX INVOICE TAX INVOICE - MIXED SUPPLIES Q The tax invoice may cover more than one type of supply (i.e. standard rated, zero” rated & exempt rated. 'supply) simultaneously to the same customer The supplier may issue one invoice to document all the above transactions (In this case the type of supply (i.e. standard rated, zero rated & exempt rated supply) must be clearly distinguished in the invoice The tax invoice must indicate separately the applicable values and the GST rate charged (if any) on each supply (SELF - BILLED INVOICE) Generally tax invoice is issued by the supplier 1 insituations where the recipient determines the value of the goods or services, the recipient can issue the tax invoice 2 The DG may approve “self-billed tax invoices” if: The value is not known by the supplier at the time of supply The recipient and the supplier agree in writing for a self-billed invoice Both the supplier and recipient are registered persons, Both parties agree that the supplier shall not issue a tax invoice EXAMPLES: v Tobacco leaves supplied to tobacco manufacturers. Insurance agents commission - determined only if company receives perniums from policyholders, + Royalty on books published dependent on number af books sold Supplies of agricultural products (price is subject to qualitative analysis) nce TOOT 93 Ib TAX INVOICE - SELF - BILLED INVOICE. ‘The recipient created tax invoice should have following particular a. the supplier’s and recipient’s names, addresses & idéntification numbers; b. the words “self-billed invoice” in a prominent place; 7 the invoice serial number; dl. the date of issue ofthe invoice; e. the reference number of the 06's approval for recipient created tax invoice; f._adescription sufficient to identity the goods of services supplied; &. for each description distinguish the type of supply for standard rate; zero rate and ‘exempt, the quantity of goods or the extent of the services and amount payable, excluding GST; ‘fh. any discount offered; i, the total amount payable excluding GST, the rate of tax and the total tax chargeable tobe shown separately; j- total amount payable including the GST charged; and k. any amounts referred to {i} and (j) must be expressed in Malaysian currency. TAX INVOICE — FOREIGN CURRENCY, For ast purposes, the amount of the supply stated in atx invoke In foreign currency have to be converted into Ringgit Malaysia (AM): “amount payable before GST Total GST chargeable “Total amount payable (including GST) Conversion of foreign currency into Ringgit Malaysia by applying the ‘open market rate of exchange prevailing in Malaysia at the time when the supply takes place. L I I I I I Tax Invoice — Pro forma Invoice “PA pro forma invoice will not be regarded as a tax invoice The taxable supplier must give a proper tax invoice so thal the recipient can claim input tax in his GST return oo | cI | 94 CREDIT NOTEAND DEBIT NOTE | CREDIT NOTE AND DEBIT NOTE Section 35 of the GST ACT 2014 > Credit note and debit note “Where any taxable supply is made by or to any registered person which involves the issuance and receipt of credit note or debit note under the prescribed circumstances and conditions, the registered person, whether he is the supplier or recipient of the taxable supply, shail make adjustments in his returns accordingly and the credit note and debit note shall contain the prescribed particulars.” Note: Y Under GST system, the credit or debit note is taken into account only if issued to adjust the value of a supply made earlier 95 ~ CREDIT NOTE AND DEBIT NOTE D Credit note is issued when the amount previously invoiced is reduced or a transaction is cancelled 7 1 Debit note is issued when the arhount previously invoiced is increased for the same supply. CF Credit & Debit Notes ust be isued within 21 days after any change in the consideration oF ‘any cancellation of the supply (G5T adjustments to reflect the actual GST fabilty) ADJUSTMENT IN THE COURSE OF BUSINESS * suppl of goods or services cancelled or * ational charges imposed after supply ewmed ‘of 000s (te transportation charges) quantity ciscoun given ater goods have 7 goods dobvored ace under ilged been supplied * goods & services were supplied foran 7 goods & services were cupplied for an ‘unascrtained (unconfemed) consideration ‘unascerdined (enconfieed) consideration CREDIT NOTE AND DEBIT NOTE pee EEO eee Ee SLL bese uae ADJUSTMENTS DUE TO CREDIT NOTE ISSUED 1 Ia credit note is isued, the taxable person must eedice his output tx for the carezpoading amount stated inthe credit note inthe return forthe taxable periad in which the credit note wasissved {2 The customer who isa repzered person on the other hand, must reduce Ris input taxa the return for the arable period in which ie received the credit nate Example {Goods sold on 20.07.2015 by company A to 8, amount RSAI000. Goods retvined an 25.08.2024 to Ccompeny A. Cedi noe issued on 25.08.2024 to Company A fr mount R222. Company A(Supplion “uly 2045 (Return) (Output tx: RIMI000 x 69% » RA 6D Input tax ~ RIM 1000X8% RM 60 ‘August 2015 (Adjustment in Return) August 2015 (Adjustment in Return) Decrease Output lax —RM2I2X 6/106 | Decrease Input tax ~ RM212 X 6/108 12.00 =RMI2.00 1 Company B Purchase ‘ly 2075 (Return) Adjust by declaring the related output & input GST in form GST -03 96 ADJUSTMENTS DUE TO DEBIT NOTE ISSUED 1 Ha debit note issued, the taxable supplier must incroase his output tax forthe eareesponding ‘amount stated inthe debit note i the return forthe taxable period in which the debit note was sued | | O rhe customer who ts seysteed person can increase input taxi the return for the taxable period in ‘which he received the debit nots. Exorple Semvices provided an 20.07.2015 by company A to 8, amount RMI000.00. Adetonol services provided ‘00 15.08.2015 by company A, amount RN212.00 Debit nte sued an 25082014 by company BAD DEBT PROVISION 97 BAD DEBT PROVISION” Account an equal amount of input tax as output tax Section 38(9) of the GST ACT 2014 “Credit for input tax against output tax “Except as the Director General may otherwise allow. — (0) where a taxable person fails to pay his supplier the consideration or eny ‘part thereof for the supply of any goods or services made by his supplier to him at the end of the period of six months following the date of supply; and (0) where the taxable person has credited under subsection (1) or been refunded under subsection (3) the input tax to which the consideration or the att thereof which he failed to pay relates, the taxable person shall account of an amount equal to the input tax which shalt be deemed as his output tax” BAD DEBT RELIEF CLAIM + Bad Debt Relief > A taxable person is entitled to relief on bad debts if the person has not received any payment or part of payment in respect of the taxable supplies from the debtor 6 months from the date of supply, or > The debtor has become insolvent before the period of 6 months has elapsed + Conditions for Relief of Bad Debt: ¥ Output tax has been paid ¥ No payment or part payment received from the date of supply Sufficient efforts have been made to recover the debt ¥ Documentary evidence of efforts made to recover the debt such as reminder letters or notice to the customer Note: The bad debt relief claim by making adj 98 BAD DEBT RELIEF (RECEIVABLES) IC GsT on accrual basis: Account for GST even though payment not received for the supply ‘of goods and services. Entitle to bad debt relief (6 months from date of supply) IG Bad debt relief (self claimed) a5 ITCin taxable period after 6 month period lapses IC tf consideration received after bad debt relief claimed, supplier have to account for ‘output tax on the receipt ILLUSTRATION: ‘Suppor ‘claimed relat Payment recsived Jo — ‘GST has tobe accounted "0 uKoM 6 YEARS PERIOD FOR CLAIMING BAD DEBI, BAD DEBT RELIEF ADJUSTMENT BY SUPPLIER: > The supplier (registered person) can claim bad debts relief > The 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 Input tax = a xc where ALis the payment not received in respect of the taxable supply 8 is the consideration for the taxable supply Cis the tax due and payable on the taxable supply | Eisssnaseataaa ee TT | RM31,800 {inclusive GST M1800). “TERRE INPUT TAX CLAIMABLE 1s MMav7016 (—Raio.co0 7 ean RM10,600 ix Balance RM10,600 RM31,800 (wor a arreré montis) — |= _RMG00 GST 03: RMT,800, (OUTPUT TAX) ADJUSTMENT BY CUSTOMER Q when a taxable person (Customer) fails to pay his supplier the consideration (wholly / part) on the supply after the period of six months from date of invoice ~ > Customer need to account for GST on the outstanding amount owed to the supplier (provided if already claim the input tax} v Customer shall deem the amount of input tax claimed (th that corresponds to the amount of payment not paid) as his output tax (RM600 in the earlier example) > The output tax should be included in the immediate taxable period in his GST Return after the expiry of six months Note: “if ceased to be a registered person, account the tax in GST-04 form ‘If subsequently pays debt, claim GST as input tax in the | REPAYMENT OF BAD DEBT RECOVERY ADJUSTMENTS DUE TO PAYMENT RECEIVED (BAD DEBTS ): The customer makes payment in-respect:of bad debts (Bad debt relief has been claimed by supplier) The supplier now accounts as output tax in the return for the taxable period in which the payment is made. Q The output tax amount to account is as follows: A2 Output tax = rr xc where |A2 - is the payment received in respect of the taxable supply Bis the consideration for the taxable supply IC. is the tax due and payable on the taxable supply Q Account as input tax (Taxable period the payment is made) REPAYMENT OF BAD DEBT RECOVERY ADJUSTMENTS DUE TO PAYMENT RECEIVED (BAD DEBTS) IuUsTRATION: QA Co. issued a tax invoice forthe following supply: Std rated supply RM10,600 (incl GST}; Zero rated supply RM20,400; Total RM21,000 © BCo. did not pay supplier (A Co.) At the end of 6 months A Co claimed bad debt relief for the output tax i.e, RM600.00, subsequently B Co. paid RM10,000 For this payment of RM10,000, A Co needs to attribute part of RM10,000 to the standard rated supply Proportion of payment to consideration: 10,600/ 21,000 x 100% = 50.47% © Amount attributed to Std rated supply for RV110,000 is RM5,047 5,047 / 10,600 x 600 = RV285.83 101 REPAYMENT OF BAD: DEBT RECOVERY. ADJUSTMENTS DUE TO PAYMENT RECEIVED (BAD DEBTS ): HLLUSTRAIONS os a 1G. .A Co issued tax invoice to 8.Co for the following supply: "+ Std rated supply RM10,600 (inel GST); Zéro rated supply. RM10,400 ; Total RM21,000. GB Co. did not pay supplier (A Co |. At the end of 6 months A Co claimed bad debt relief for the output tax ie. RM600.00 1D Subsequently 8 Co pad RMi0,000 1G For this payment of RM10,000, A Co needs to attribute part of RM10,000 to the standard rated supply Proportion of payment to consideration: Sete X 100% = 50.47% [C. Amount attributed to std rated supply for RM10,000 is RMS,047, C1 Amount for repayment for the bad debt relief (i.e.RM600 output tax) is Sat x 60° _ RM 285.83, 102 RETURN AND PAYMENT Section 41 of the GST ACT 2014 “Furnishing of returns and payment of tax” (2) Every taxable person shall, in respect of his taxable period, account for the fax in a return as may be prescribed and the return shall be furnished to the Director General in the prescribed manner not later than the last day of the month following after the end of his taxable period to which the return relates.” $2) Bor” TAXABLE PERIOD Q Section 40 Taxable period is a regular interval where taxable person accounts and pays GST ¥ Quarterly Basis - Annual turnover below RMS million ¥ Monthly Basis - Annual turnover exceeds RMS million ¥ Other Taxable Perio Apply in writing to 06 a 103 FILING OF GST RETURNS. SSUBRAIT RETURN AND PAY TAX > Last day to file return & pay tax s last day of the month following taxable period ¥ if fast day is a holiday ; then the following working day > Alltaxable persons must submit a return for each taxable period {all GST input tax deducted from all GST charged for supplies and payment to be ‘accounted within a month of the expiration of the taxable period) > Needs to account correctly & timely for GST due and payable to prevent penalties > Nil return to be submitted even if there is no tax payable > Non submission of GST return (Sec 41(6)) & Non payment of GST (Sec 41{7)) constitute 2 offences sepatately. Any person who commits any of the offence are liable to- Y fine not exceeding RMS0,000; or Y_ 3 years imprisonment; or Y Both 2 compeundable offence + maximum compound RM25k eee ee ee eee eee GST RETURNS AND PAYMENT D_ Any error in dedaring the GST-03 the taxable person can furnish an amended GST return by using the GST-04 form Electronic fi is encouraged Voluntary disclosure - Taxable person if made an error or 2 mistake in his GST obligations ‘can make a voluntary disclosure in writing to 1G (may reduce the amount of penalty) Payment can be made at the nearest GST Office or the approved participating bank by cash; bank drafts; cheques; money order / postal order; credit card or via online fund transfer using inteenet banking or Electronic Fund Tranefer (EFT) 104 GST RETURNS * GST-03 FORM — Businesses should not underestimate the preparation, time & information needed to complete thé particulars + Ifeach registered person has multiple businesses, the value of supply, output tax, value of acquisitions, input tax credit etc. of the’ companies have to be aggregated * If they have businesses in different industries, the breakdown of output tax by industry should also be accounted + Representative member of a GST group is required to submit a single return (aggregate) in respect of all members of the group GST REFUNDS: Y¥ 14.working days for electronic submission ¥ 28.working days for manual submission GST RETURN Y Yo GST Processing Centre or nearest GST station by post 10 GST Processing Centre {By electronic service (Electronic fling — encouraged) Payment Output Tax> input Tax Refund = Output Tax < Input Tax ‘0 Tax Deciaration No payment - — Cutput Tax = Input Tax No payment No output tax & no input tax Note: ¥ Cerification J declaration that return is TRUE and Complete ¥ Acknowledgement Receipt slip wil be issued ere ees | P RECORD KEEPING DUTY TO KEEP RECORD RECORD KEEPING Record Keeping Section 36 of the GST ACT 2014 “Duty to keep records” “(1) Every taxable person shall keep full and true records written up to date of all transactions which affect or may affect this liability to tax, including the following records...” {@)All records of goods and services supplied by or to that taxable person including tax invoices, invoices, receipts, debit note, credit note and export declaration forms; (b)All records of importations of goods; and (cJAll other records as the 0G may determine” “Preservation of records” "(2) Any record kept under this section shall be ~ (2) preserved for a period of 7 years from the latest date to which the record relates; (b) in the national or English language; and (c)_ kept in Mataysia eee IT 106 SEE ne an DOP Doe TYPES OF RECORDS QL. GsT operates on'a self assessment mectianism QO Sec 36 - Duty to keep records (mandatory requirement). OQ. Taxable persons required to keep full & true records as follows: ¥ all records of goods and services supplied by or to that taxable perso} {including tax invoices, non tax invoices, receipts, credit notes, deb| notes, export declaration forms etc. ¥ all records of importation of goods Y Allother records as the DG may determine & GST Returns Q 1 tn Bahasa Malaysia or English Q 7 years 1 insoft or hard copy (if electronic ~ readily accessible & convertible) Q kept in principal place of business — sear FAILURE TO KEEP RECORDS QO Any person who contravenes Section 36 GST Act 2014 commits an offence and shall, on conviction, be liable to a fine : OQ) not exceeding RM50,000; or O to imprisonment for a term not exceeding three years. QO) or to both. OOOO 107 i i RMC GUIDE ON RECORDS KEEPING . © The specific records that taxable person are required to keep include: > (a) Business Entity Records : Business registration records such as Form 9, Form 13, Form 24 or Form 49 > {b) Taxation Records (0 6ST returns, payment slips and receipts; (i) Export release records, such as exports declaration (K2), records for the taxable goods status and other related records. i) Import release records such as: + imports declaration (Ki, KS), Customs Official Receipt (COR) and value declaration form (Ka) + transportation records such as invoices, delivery orders, packing lists, bil of lacing, insurance records, transport charges and other related records; RMC GUIDE ON RECORDS KEEPING + Letter/Classification Ruling or Decision/Valuation Ruling or + Customs Advance Ruling; + exemption letters obtained by the registered person; and + Import Permit; {iv) Records and documents to account for any adjustments related to GST input and output tax; (¥) Inland Revenue declaration forms; (vi) GST Summary Sheet; (vii) GST adjustment working sheet. 108 RMC GUIDE ON RECORDS KEEPING 1D (c) Business Transactions Records (i) Sale and purchase records such as purchase order or order notes, delivery orders, tax invoices, invoices, receipts, vouchers, cash register roll, debit/credit notes and other related records i) Contract records (iricludés sub-contracts) such as + agreements between buyers and sellers or parties involved in business transactions, + letter of concession power, + joint venture/ leasing, manufacturing, royalty, franchise, licence and other Intellectual Property Rights (IPR) agreements + agency commission or brokers contract, + Distribution or sale and purchase contract; and other related records ~ RMC GUIDE ON RECORDS KEEPING (iii) Correspondence records such as mail, facsimile, e-mail and other related: documents (iv) Payment records such as cheques, bank drafts, letter of credit, fund transfers applications, debit advice and other related records {v) Details of any agents acting on supplier or principal's behalf and transactions concluded through agents (A) Accounting Records (i) Audited Financial Report including Profit and Loss Account. (ii) Management Account. (ili) General Ledger and Subsidiary Ledger (v) Fixed Asset Register (iv) Cash Book 109 Pie LEE I RMC GUIDE ON RECORDS KEEPING {(vi) Production records, stock sheet/list and control list; - (Vii), Debtors and creditors lists (in respect of a change in accounting basis) 7 (vil) Audit adjustments (ix) Journal, acceptance slips, receipts, payment vouchers, payment slips and other supporting records {e) Other records: (i) business goods which were put to non-business use; (ii) disposal of business goods, whether or not for a consideration; (ii) gifts to customers in the course or furtherance of business (iv) samples given to potential customers in the course or furtherance of business; (v) fringe benefits given to employees; and (vi) movement of imported goods to/from Licensed Wat RECORD KEEPING ¥ Tax invoices, invoices, receipts, ¥ Debit note, credit note ¥ Delivery order, purchase order v Bank slip, bank statement, voucher and etc. ¥ Contract, agreement GRecords relating to |v Fin ancial statement — Profit & Loss, accounting (hard Balance Sheet, Trial Balance I copy) ¥ Account payable, account receivable, I General ledger, Sales, Purchase , stock, cash and etc. ; ee TTT 110 RE ECORD KEEPING Purchase, Sales,Gl Listing (2g stanc cxcmpt, disregard, out of scope, déemed ‘supply etc) > ¥.GAE File (GST Accounting Software). Management information Report (MIS) repor. ¥ Other data / records keep in accounting / business software form QRecord in electronic] v The record in an electronic form, shall be kept in such a manner as to enable| the record be readily accessible and) convertible into writing |G Records as evidence ¥ Such records shall be admissible as evidence in any proceedings NOTE: Sec 36 ~ expressly states latest to which the records rek that records must be retained for 7 years from the lates in 8M or English 7GST audits are a cerlainty RMC audits to ensure GST liabilities accounted correctly & supported by necessary records and documentation — 111 SPECIAL SCHEMES Q There are 7 special schemes (for different categories of taxable persons) Approved Trader Scheme (ATS) ¥ Approved Toll Manufacturer Scheme (ATMS) Y Warehousing Scheme (WS) Y Approved Jeweller Scheme (AIS) Y Relief for Second-Hand Goods ¥ Tourist Refund Scheme (TRS) v Flat Rate Scheme (FRS) 112 SPECIAL SCHEMES APPROVED TRADER SCHEME (ATS) APPROVED TRADER SCHEME (ATS) “Approved Trader Scheme™ - Section 71 of the GST act 2014 (1) There shall be a scheme to be known as “Approved Trader Scheme” which allows the Director Generel to suspend the payment of tax chargeable on the goods imported by any taxoble person who qualifies ot the time of importation provided that the goods are imported in the course or {fortherance of his business {2} Any taxable person granted on opproval under the Approved Trader Scheme shall account the suspended payment of tox in the return for toxcble period to which the suspension relates PURPOSE: > A facility to relieve GST payment on importation of goods > To alleviate cash flow problem for certain category of traders i > Caters for all major exporters in Malaysia PERSONS ELIGIBLE FOR ATS Companies located within Free Industrial Zone (FIZ) Licensed Manufacturing Warehouse (LMW) International Procurement Centre (IPC) Regional Distribution Centre (RDC) Toll manufacturers under ATMS Jewelery manufacturers under AJS ‘Companies with turnover above RM25 million and at least 80% of their supplies made ate zero-rated; or Q Any other person approved by the Minister googo000 Under ATS: Y ATS participants are allowed to suspend GST on the importation of goods Y Goods imported is used in the course or furtherance of business ¥ The amount of GST suspended needs to be declared in the GST return month which the importation takes place the APPROVED TRADER SCHEME (ATS) Q CONDITIONS / CRITERIA FOR APPROVAL UNDER THE SCHEME ~ Must be registered person under section 20 of GST Act ‘Must make wholly taxable supplies ‘Must account for tax on a monthly taxable period Must be registered user of the electronic service Makes declaration on the importation of goods electronically Must have good accounting and internal control system Must furnish security if required any other conditions as may be determined by DG KASS SKA K a GOODS NOT ELIGIBLE FOR THE SCHEME wine, spirits, beer and malt liquor tobacco and tobacco products any goods which input tax credit is disallowed (blocked input eee = SPECIAL SCHEMES. APPROVED TOLL MANUFACTURER SCHEME (ATMS) “APPROVED TOLL MANUFACTURER SCHEME || Approved Toll Manufacturer Scheme Section 72 (1) of the GST ACT 2014 “There shall be a scheme to be known as “Approved Toll Manufacturer Scheme” which allows any taxable person who qualifies to disregard the supply of goods which comprises the treatment or processing of goods for and ta a person who belongs in a country other than Malaysia subject to the prescribed conditions” Section 72 (2) of the GST ACT 2014 “Any person who belongs in Malaysia ond receives the treated or processed goods from the toll manufacturer (hereinofter referred to as the “recipient”) shall account ond poy for tox os if the recipient had himself supplied and acquired the goods in Moloysia in the course or furtherance of his business ond as ifthe supply were @ toxable supply” PURPOSE: A facility to overcome the GST embedded when a person buys goods from an overseas. person via a local toll manufacturer 115 APPROVED TOLL MANUFACTURER SCHEME APPROVED TOLL MANUFACTURER SCHEME. This scheme applies only to toll manufacturers "(add value to goods owned by someoné else) Gi Value added activity may include treatment of processing of goods such as. assembling, finishing and polishing or other manufacturing works - Ch No GST liability when the treated or processed goods are sent back to the overseas principal Toll manufacturer need not account for GST on the local supply made by overseas principal (drop shipment) O Local customer shall account tax as if he supplied and acquired the goods. GST liability will be shifted to the local customer by way of “recipient self- accounting”. (2 Goods or services acquired by the toll manufacturer from local market will be subject to GST Any acquisition of goods for value added activities carried out on consigned goods or the account of his overseas principal will be entitled for zero rat Overseas principal 3, invoices local TM invoices overseas ‘TM invoices 4. customer on overseas 0 finished goods incipal for principal for received value-added a services MALAYSIA, ‘Local Customer Recipient accounting 4 : Toll * Manufacturer _ ® APPROVED TOLL MANUFACTURER SCHEME ATMS ELIGIBILITY CONDITIONS ARE AS FOLLOWS: ‘ATMS participant must be GST registered Carry out value added activities for overseas principal At least 80% of finished goods are-exported Must be a registered user of electronic service Must submit monthly GST return: All parties in the supply chain must together apply for ATMS Must have good compliance record, maintain good accounting and internal control system > Contracts for value added activity of RM2m or more per annum VV VV VY “APPROVED TOLL MANUFACTURER SCHEME Qi cst TREATMENT FOR ATMS: Any supply of value added activities made by toll manufacturer (TM) to overseas principal (processing. charges/toll) to be disregarded Any supply of processed goods by TM on behalf of his overseas principal to his local customer which constitute as a supply under GST would be disregarded Y However the local customer (registered person & non-registered person ) have to account for the GST by way of “Recipient Accounting” > Registered person— GST return (GST-03} > Non Registered person — prescribed form GST-04 Acquisition of goods by OP: ¥ Local supplies delivered to the toll manufacturer under the account of overseas principal is zero rate: Time of Supply to account for GST under ATMS: 2), When payment incest ofthe sy made; o )_ Recent reeves amie rm OP" he 7 ern OTST =| 1a7 Po | SPECIAL SCHEMES WAREHOUSING SCHEME WAREHOUSING SCHEME Section 70 GST ACT 2014 “WAREHOUSING SCHEME” (1) * In relations to goods that have been imported and deposited in the warehouse and for which tax would be chargeable on the imported goods, there shall be a scheme to be known as :"Warehousing Scheme” which allows supplies of goods made within the warehouse to be disregarded except for the last of such supplies of goods which are removed before the duty point” (2) “The last supply referred to in subsection (1) shall be treated as taking place at the duty point and the value of the supply shall be treated as including the duty, if any.” 118 8 | s- — <== ‘WAREHOUSING SCHEME (2 TYPES OF WAREHOUSE (Section 70 (7) GST Act 2014 > any customs warehouse > any licerised warehouse. > any duty free shop > — any iniand clearance depot © Warehousing scheme allows iniportérs to suspend the payment of GST at the time of importation on goods imported and deposited in a warehouse O The imported goods will be subject to GST when it triggers the duty point (imported goods taken out from the warehouse) O Value of fast supply includes any duties (customs duty or excise duty or both WAREHOUSING SCHEME | 634 suspended 1D Gstsuspended'on ‘err g0005 | “removal goods imported & Wom awacchouse ‘deposed » inte another ‘warohouse ‘warehouse 2 ‘upoies mace Goods & services within a consumed na warehouse is warehouse ae Giorogaeded Sondard rated WAREHOUSE A. WAREHOUSE 8 O Goods release locally = standard rated Goods release overseas = 2er0 rate OVERSEAS MALAYSIA 119 Peer WAREHOUSING SCHEME GST TREATMENT- WAREHOUSING SCHEME 0 GST on goods deposited into the warehouse to be suspended - GsT on goods moved from one warehouse to another Warehouse to be suspended @ Intermediate supplies within a warehouse to be disregarded C0 The last supply is subject to GST (trigger the duty point) Goods released to local market to be subjected to GST Q. Goods released to overseas market to be zero- rated Q Allgoods and services consumed in warehouse to be standard-rated 120 OFFENCES AND PENALTIES (st set space tenes ta cena which re poared by Par econ 88 ST Act 2018 niacin tener comofnce wit the et, roma aie paces otc cate 1 erat genhy 495s when tate pein fle tncopy with prosion fe el ‘sei pesaty prone that rovsion [er incre retune 208 + Fine: fok exceeding AN 50.000: + ipeorment: not exceedion 3 yes Orboth Fa esr oft aus Tin aging ror 30-20 times the a ded epost at enceting yee oan in aging rom 20-40 tes ofthe tn ead 121 l OFFENCES AND PENALTIES 71 doy aie (ating owe beers} sim [D failure by personal epeseatve to Ge | = Fine: notexeeding 095,000.00, Imprzonment aot ceeang 3 yor + orboe (OFaae pie once (tn 9 5 easing often toe moire ‘ate supe minor aude Maaise 225i) Tine pot eeesne Ran DOGO, mpeeosneat ot exceeding ose + Orbe 122 Nl OFFENCES AND PENALTIES sur 2 ota ce ae 2 Patent REVIEW AND APPEAL The GST Act sets out the review and appeal procedure (Sections 123 ~ 153) 1D There are 3 avenues for review and appeal as follows: ¥ Application to Director General for review ¥ Appeal to the GST Appeal Tribunal ¥ Appeal to the High Court 1 Parties aggrieved by decision of RMC officer may appeal Lo DG for review within 30 days DG must make a decision and notify the aggrieved party within 60 days from the date of application G Further appeal to the Appeal Tibunal within 20 days from the decision of OG 1 Sec. 148 ~ Any party aggrieved by the decision of the Tribunal shall have right of appeal from the decision of Tribunal to the High Court on a question of law or of mixed fact and law Let OE 123 I GST APPEAL TRIBUNAL JURISDICTION TO HEA! “C1 The GST Appeal Tribunal has the jurisdiction to determine appeals relating to GST i except on the matters listed below: (2)- any matter which isinherent of a statutory restriction under the GST Act (2) any diréction to treat person as a single taxable person {3) any refusal of voluntary registration {4}: any refusal of group registration (5) any matter relating to reassignment of the taxable period f} (6 ote tex apni retina (2), any seizure and selting of any goods for recovery of any amount (8) any refusal of permission for payment by instalment {9)_ any decision to reduce or disallow any refund (20) any refusal to refund an amount paid by any person GST APPEAL TRIBUNAL JURISDICTION TO HEAR: (21) any refusal to remit any penalty or surcharge (22) any refusal to approve any application for any scheme (23) any advance ruling made (12) the exercising of any enforcement powers (25) the compounding of offences (26) any matter relating to approval of reward by the Director General (17) Any matter relating to special refund of sales tax for goods held on hand on affective date (01.04.2015) 1 Minister may amend list by orders published in the gazette 1 Parties may resort to applying for judicial review at the High Court POWERTO ASSESS. "Power to assess” - Section 43 of the GST ACT 2014 “Where any taxable-person— (a) fils to apply for registration under section 21; (6) fails to furnish a return under section 41; or : {6 furnishes o return which to the Director General appears incomplete ar incorrect, the Director General may astess to the best of hs judgment the amount of tox including the penalty under section 45, if ony, due ond payable from the taxoble person and shall forthwith notify him ofthe assessment in writing.” (2) (pues The 0G has the power to assess the tax due and payable including penalty limited to a period not more than six year from the date on which the tax was due and payable, except wherein the cases of fraud Any assessment of tax and penalty made by the DG may be withdrawn, reduced, altered or added to ensure itis corvect 1G The best judgment assessment denotes it must be founded on a reasonable opinion that GST lability exists & the assessment amount must be reasonable GST AUDIT PURPOSE OF GST AUDIT: Q To ensure compliance to GST legislation & regulations O Create awareness of taxable person on GST compliance Q accountability & responsibility rests with business operators to ensure full compliance HIE TYPES OF AUDIT: 1 DESK AUDIT Involves checking & verifying of information on GST returns. {determine correctness & accuracy of information declared) REFUND AUDIT Verifying refunds claimed by taxable persons are true & correct CUTRANSACTION AUDIT _ | Verifying that transactions exist & are correct complied & reported: 1 Apvisony AUDIT Provide advisory services to enable taxable persons understand GST legal requirements & encourage voluntary compliance COMPLIANCE AUDIT | Comprehensive audit on all transaction (selection of audit cases is based on risk assessment & alsa in information } i ACCOUNTING SOFTWARE REQUIREMENTS. (GUIDE TO ENHANCE ACCOUNTING SOFTWARE TO GST COMPLIANCE) Issue the tax invoice, C/N, D/N in compliance with GST Legislations Providers reporting facilities for generation of Information necessary to prepare tax returns Provide comprehensive documentation to assist auditors and users to understand how the system operates Incorporate adequate internal controls to ensure reliability of the data being processed Create adequate audit trails to assist customs auditors to understand the flow of events and reconstruct the events if necessary Has in place archival and restoration of archived data mechanism and readability of electronic records after an extended period Contain key data elements necessary for business net CTE ‘Accounting Software Requirements 7" ; (Guide To Enhance Accounting Software To GST Compliance) : 3. Allows production of GST Audit Fite (GAF) by non-specialists (staff who do not have background) 9 Purchase Usting for GST purpose inehales-fiurchases, expenses, Importations ~ vided into ATS, Warehousing Schemes, capturing Ki and KO form numbers, actual ‘GST paid, Mataysian Ringgit equivalent for foreign currencies, ete ‘9, Supply listings for GST purpose includes value of goods put to private use (deem Supply, but no revenue to the company) and its relevant GST output tox, export of goods, MYR equivatent fr foreign currencies, ete 11, Mastet fie information for Registoréd Person, Supplis, Customers, Genera Ledger ‘Accounts and Diflerent Kinds of GST input and Output Tax codes 12. Able to input key data of sales and purchase invoices, D/N, C/N, Payments, ete. GST TAX CODE (PURCHASES) Porches bith GST incured te and deeclyatirbuule w sabe mp0 of goods with GSTineur moors uider special theme wi fa GST inefes Te ATS ATMS siemel "=| Purchase with GSTingured but ot enable (Blocked op To Purchases om non OST registered spate withino GST need Purchase rom GST registered supplier with no GST incured (eg. transportation of ods that quality a nternational eres) Purchaser exempted fiom GST a eden property t Gut scope puree Purchaes with GST nc Purchases with GST incxred directly atiibutable to non Inckdental exempt suppis _—_ Purchases with GST thats not directv attributable to Taxable or exempt sumples GP | os | purchase transactions which ave diseganded supplies fg, pordhases ~ i within GST group members) eS 127 GST.TAX CODE (SALES) ‘ADJUSTMENT TO INPUT TAX ee ACCOUNTING SOFTWARE REQUIREMENTS (GUIDE TO ENHANCE ACCOUNTING SOFTWARE TO GST COMPLIANCE) Other Features: 1 GST tax code data to be able to transfer direct to GST 03 form for filling of returns Able to do partial exemption calculations such as apportionments, annual and longer period adjustments with Build in Formulas Able to compute the De Minimis Rule (DmR) GAF file to custom auditors in Text File Format: + Can submit an XML file or + Bar-Delimited Fite 128 “TRANSITIONAL RULES (REPEAL OF SALES & SERVICE TAX) Secon 178 ofthe GST ACT 2088 “Repco! ond soviet of Se Tox Ret 1972* “111th Soles Tx Ae 1972 irapeoes. Bj tltwitstndig the epetof the oes ox At 1972, ny by ica ses ue, oreo ‘ance pad under tat kt may be cole hui, refered ot A a bao repeated” Section 181 of the GS 204 “Repect ond sovings of See Tax At 1975" 1a) Te Seren At 1975 isrepeted (2) neewitotonaing the repeat the Sere Yon At 1975 oy ley incur, sever due, oo oF rane posure tot ht my be cata faded ried oesforeed ofthat kt hasnt bean Section 189 of the Gta 20% fect sles to nd grit” Lith effect from a eft Ste {o)sces to stl mtb chargeable on ony sae, paraorsnparttion of eneble 924s wet Ses {0} service tx shal aot Be charge onary tena enw des the Service Tx Ac 2973, 129 TRANSITIONAL RULES (SALES TAX & SERVICE TAX) GENERAL RULE >. Any supply before GST (1 April 2015) is not subject to GST > Any supply on or after 1 April 2015 is subject to GST Ol EXCEPTIONS TO THE GENERAL RULE > Supply of warranty > Supply of goods where sales tax has been charged > Supply of services where service tax has been charged > Non reviewable contracts SUPPLY SPANNING GST > Supply spanning GST means payment or invoice before 1 April 2015 (appointed date) and supply takes place on or after effective date e.g, sales of goods, airline tickets ‘TRANSITIONAL RULES (SALES TAX & SERVICE TAX) Supply spanning GST Section 183 of the GST ACT 2014 “Payments, invoices and importation before the appointed date” *{1) Tax shell not be chorged ond tevied on any supply of goods or services or Importation of goods mode before the effective date.” Oi Under Sales Tax regime, Sales taxis only chargeable when there is sale, disposal or use of the goods G ifpayment is received or invoice issued before goods are supplied, the licensee cannot charge sales tax Gi However, if the goods are supplied after the AD (although payment is received or invoice issued before the AD}, the goods will be subject to GST C1 As for importation if the goods are imported before the AD and released 130 eee ee REPEAL AND SAVINGS (SALES TAX ACT 1972) 1 tcensee ost registered CO Senica5e dean "pote : 1D Service return afer AD = Any person Kensed under Service tox Act 1975. whether regitered under GST Actor ot shal furnish a nal tur for the last table period nt later than 28 days ater 14.2015 1D Any person tensed under Service Tax et Shallsote and pay 1) amOURE of Senvce tax not received within 3 period of 12 montis preceding the last tarable period, and 3) amount ‘of serice tax not received from cSests for taxable sete preceding and sveceeding lst tabla period and snvce tox femain unpaid but have not exceeded 12 months from date of Ti) amount of service tak al taxable services provided inthe tis twable peiod 'u}_the amount of Service tax or all taxable services provided before 18.2015 where invoize was issued or payment is veceved ser 14.2015 131 apr arenen salsa — I SUPPLIES SPANNING GST. Goods supplied © [Subject to.GST and _ s = = feonsi jeration for supply is deemed to be GST inclusive NON REVIEWABLE CONTRACTS Supplies made pursuant to reviewable contracts ‘Section 187 of the GST ACT 2014 “Contract with no opportunity to review * “(4) This section shall apply where— (0) a written contract specifically identifies a supply and the consideration for the supply; and (b) any supply is made pursuant to any contract with no opportunity to review entered into not less than two years before the effective date.” MEANING OF NON REVIEWABLE CONTRACT: Written contract with no provision to review consideration for the supply until a review opportunity arises AND 24 months before the date of GST implementation date 132 —oooo NON REVIEWABLE CONTRACTS (Gl meanine oF Review OPPORTUNITY: * Opportunity for supplier either by himself or with agreement to.~ ‘change the consideration because of the imposition of GST ¥ conduct o review ofter AD, renegotiation or alteration of consideration, or Y conduct a review before AD, renegotiation or alteration of consideration (GST-TREATMENT FOR NON REVIEWABLE CONTRACT: Q Zero rate supply for 5 years after appointed date or when a review opportunity arises whichever is the earlier if Y. both supplier ond recipient are registered persons Y supply isa taxable supply; and Y the recipient of the supply is entitled to claim input tax on that supply, After 5 yeors period, revert to either standard rated or zero rate RIGHTS GRANTED FOR LIFE j_ Section 189 of the GST ACT 2014 - “Rights granted for life” *(a) This section sholl apply where— (0) @ taxable person who is @ club or other similor body, makes a supply of services under en agreement; (b) the ogreement provides whether expressly or implicitly that a right is to be granted or exercisable for the rest of the person's life or for a period of not less than thirty years; ond (c) the rights is granted or first exercisable before the effective date. (2) Where any payment for rights gronted or exercisable for the rest of the person's life or for a period of not fess than thirty years is paid by existing or new ‘members of club, or other similar body for any rights to use facilities of the club or ‘other similar body, the supply of services on which any payment is made ~ 0) before the effective date, shall ot be chorgeable to tox; and (0) onorafter the effective date, shall be chargeoble to tax. Note: If payments not made in full before 01.04.2015, periodic payments after 01.04.2015 will be subjected to GST 133 re a WARRANTY supply of warranty is not subjected to GST if the supply of warranty:- ’), begins before 01.04.2015 and ends after 01.04.2015; and i) Felates to goods or services (whether expressed; imiplied oF required by law), where the value of the warranty is included in the price of the goods and services during the purchase Extended warranty purchased-also not subject to GST since warranty that spans the appointed date is not subject to GST G Input tax on any items used to carry out the warranty repairs is allowable {twas incurred in the making of taxable supplies) G1 However, if warranty relates to a separate supply which requires purchase of spare parts or replacements of defected product, the supply of goods Is subject to GST at a standard rate RETENTION PAYMENT “Retention payments” - Section 194 of the GST ACT 2014 “where any contract for the supply of goods or services before the effective date provides for the retention of ony part of the consideration by a person pending full and sotisfoctory performance of the contract, or any part of it, by the supplier, the retention payment in respect of any supply made after the effective shall be chargeable to tox.” Q Retention payment refers to 2 specified amount which forms part of the consideration is withheld and released only after the project is completed and satisfactory performance of a contract GST has to be accounted on retention sums whenever a payment is received or a tax invoice is issued for it. 1 Ifretention sums are made under a written contract before the effective date for a supply of goods or services, then the retention payments that relates to a supply made after the effective date shall be subject to tax. 134 UNREDEEMED VOUCHERS. Section 195 of the GST ACT 2014 - “Unredeemed vouchers” “Subject to section 183, goods or services Supplied on or after the effective date in» the redemption of vouchers issued before the effective date shall be chargeable to tox” G Aniy voucher for goods and services Issued before 01.04.2014 and rédéemed after the effective date will be subject to GST © if non monetary voucher issued before 01.04.2014 and redeemed after the cffective date, the supplier will have to account for the GST on the goods redeemed Q No tax will be charged on redemption of voucher if sales tax or service tax has, been paid on the voucher before the effective date gg | PROGRESSIVE OR PERIODIC SUPPLIES Section 188 of the GST ACT 2014 - “Progressive or periodic supplies” “{1) Where any supply is made under on agreement for a period or progressively over a period whether or not at regular intervals and that period begins before the ‘effective date and ends on or after the effective date, the proportion of the supply which is attributed to the part of the period on or after the effective date shail be ‘chargeable to tox.” Dif supply over a period or progressively over a period which straddles GST effective date for any supply of goods the proportion of supply on or after eifective date shall be chargeable to tax for any supply of services it shall be taken to be made continuously and uniformly thoughout the period of the agreement The proportion of the supply made on or after the effective date is subject to GST Othe supply will not be subject to GSt * Sales Tax has been charged to the extent of the invoice = Service Tax has bean patd to the extent of He invoice "Any contracts with no opportunity to review | 135 i SPECIAL.REFUND “Special refund of soles tax for goods held on hand” - Section 190 of the GST ACT 2014 “1a)A person is entitled toa special refund equal to the amount of soles tox in respect of the goods held on hand subject tothe fllowing conditions.” (o)~ (a) “Q2)- (4). “Cloim for special refund” - Section 191 ofthe GST ACT 2014 (1) Any person who is entitied to. special refund under section 190 shall be elgible to daim once ond such claim sholl be mede tothe officer of goods and services toxin a frm {5 the Director Generol may determine nt lotr than six months from the effective dot.” 2) (Shan” tive 16 special refund of sales taf Gaimiantis egitered (mandatory) person + Dold goods on effective dai for making taxable supply |= eoods are subject to Sales Tax, been charged and paid Tn posdession of flevant invoices or import document to show sales tax has been paid eo CLAIM FOR SPECIAL REFUND REDUCE SPECIAL REFUND TO 20% (20% METHOD}: Geduce [+ Goods are subject to sales x clsim of [purchase goods from non licensed manufacturers see to._[*_Clalmant ia registered (mandatory person 20% |» tn postession of relevant invoices which does not show sales taxhas been charged and the invoice amount has been paid by the claimant before effective date + Hold goods on effective date for makin; Reduce the actual purchase price by 80% O Special refund = actual price x 20% x sales tax rate ILLUSTRATION: Holds RM10,000 raw materials on AD Special refund = RIV110,000 x 20% x 10% = RMRM200 136 CLAIM: FOR SPECIAL REFUND GOODS NOT ELIGIBLE FOR. SPECIAL REFUND: dart lly Bier povatdinte other gods ee dine ORO ok ~ eligible f special refund = "Goods tot Yor sale or exchange e.g. containers, stationaries, ‘moulds, manufacturing aids: = Goods entitled to drawback CLAIM FOR SPECIAL REFUND MANNER TO CLAIM SPECIAL REFUND: TDMake ONE [> vrifcation and aud certificate issued by a Chartered claim within § | Accountant for special refund RM10,000; corrections 1+ specs refund pid in 8 equal instalments over a2 year period allowed _ e | + toaccount as output tori special fund i claimed and goods are Use special returned form {manual ‘or online) 7 special fond to be offset against amy unpaid tes + RNC con recover All special vefund # provide inaccurate, misleading or misrepresented information ‘an offence (2.96 penalty imposed) ron appealable matter MJ —§

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