Your employees may have incurred expenses on behalf of the company. For example, expenses incurred for entertaining clients or making business calls using their personal mobile phones. In most cases, the tax invoices for these expenses are in the name of the employee instead of the company.
Claiming input tax
Generally, you are not allowed to claim input tax if the tax invoices are not addressed to the taxable person (i.e. your company name).
However, input tax claims can be allowed if you can prove that your employee is acting as an agent of the taxable person (i.e. your company) in receiving the supply of goods or services. For example, evidence of reimbursements made to the employee and recognising the bills as business expenses in your accounts, etc.
The input tax claims are subject to other conditions as follows:
- You are a GST-registered business;
- The goods or services are used or to be used for the purpose of your business;
- The input tax is directly attributable to taxable supplies or out-of-scope supplies which would be taxable if made in Singapore;
- The input tax claims are not disallowed expenses under Regulations 26 and 27of the GST (General) Regulations.
Segregating business and personal expenses
The tax invoice in the name of your employee may include both business and private expenses.
In this case, you need to segregate the business expenses from the private expenses. GST incurred for the private expenses is not claimable.
Your employee uses his personal mobile phone to make both private calls and business calls. The phone bill is in the name of your employee. The company will reimburse him for all his calls.
For input tax claiming purpose, you will have to segregate the bill into private and business expenses. GST incurred on the private calls is not claimable.GST incurred on the business calls is claimable if you can prove that the employee is acting as an ‘agent’ for the company.