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For GST-registered businesses

Generally, input tax incurred in the making of exempt supplies is not claimable.

If you make both taxable and exempt supplies, you may be able to claim all your input tax incurred (including those used in the making of exempt supplies) if you can satisfy the De Minimis Rule.

De Minimis Rule

For prescribed accounting periods or longer periods before 1 Apr 2008 For prescribed accounting periods or longer periods beginning on or after 1 Apr 2008

To satisfy the De Minimis Rule, the value of your business’ exempt supplies has to be less than or equal to:

  1. average of $20,000 per month; AND
  2. 5% of the total value of all taxable and exempt supplies made in that period. 

To satisfy the De Minimis Rule, the value of your business’ exempt supplies has to be less than or equal to:

  1. average of $40,000 per month; AND
  2. 5% of the total value of all taxable and exempt supplies made in that period.

 

If De Minimis Rule is satisfied

If the De Minimis Rule is satisfied, you may claim all the input tax incurred. However, disallowed input tax under regulations 26 and 27 of the GST (General) Regulations is still not claimable.

As the input tax claims are only provisionally allowed at the end of each prescribed accounting period, you are still required to perform a longer period adjustment by performing the same test in respect of the input tax claims you have made in the longer period.

If De Minimis Rule is not satisfied

If the De Minimis rule is not satisfied, you are not allowed to claim input tax directly attributable to the making of exempt supplies.

For input tax that cannot be identified as directly attributable to either taxable or exempt supplies (residual input tax), the amount that can be claimed is computed using the following formula:

Residual input tax formula

For more information on De Minimis Rule, input tax apportionment and longer period adjustment, please refer to GST: Partial Exemption and Input Tax Recovery Recovery  (477KB).


FAQs

 

Standard-rated supplies $2,080,000
Zero-rated supplies $300,000
Exempt supplies $120,000
Total supplies  $2,500,000

Applying the De Minimis Rule:

  1. Value of average exempt supplies per month = $120,000 ÷ 3 = $40,000
  2. Percentage of exempt supplies over the total supplies = ($120,000 / $2,500,000) x 100% = 4.8%

Since the value of average exempt supplies is not more than $40,000 per month and 5% of the total value of supplies, the De Minimis Rule is satisfied and all input tax incurred for the making of exempt supplies are provisionally claimable.


 

 

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Last Updated on 15 April 2014


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