Goods on Consignment

In general, there are two separate supplies of goods in a consignment sale. The first supply is from the consignor to the consignee, followed by the second supply from the consignee to the customer.

Time of Supply Rules Effective 1 Jan 2011

Goods Sold on Sale or Return terms

For goods sold on sale or return terms effective 1 Jan 2011, the consignor should account for GST on his selling price to the consignee at the earliest of the following:

  1. When any payment in respect of the supply is received;
  2. When the invoice in respect of the supply is issued; or
  3. 12 months after the removal of the goods.

The payment received must be to discharge an obligation to pay for the supply arising from the adoption of the sale.

Security Deposits

The mere receipt of payment will not be regarded as consideration received if it is held as security pending the adoption of the sale.

If such a security deposit is collected upfront, payment is received only when the deposit is applied as all or part of the consideration for the supply, following the adoption of the sale.

Once there is a payment received or an invoice issued, GST has to be accounted for based on the full selling price of the goods.

Goods Sold on Terms Other Than Sale or Return

When the goods were sold on terms other than on sale or return (effective 1 Jan 2011), the consignor should account for GST on his selling price to the consignee at the earlier of the following:

  1. When payment in respect of the supply is received; or
  2. When invoice in respect of the supply is issued.

For the consignee, he should account for GST on his selling price to the customer at the earlier of the following:

  1. When an invoice is issued; or
  2. When payment is received.

Goods Sold on Sale or Return terms

For goods sold on sale or return terms prior to 1 Jan 2011, the consignor (the person sending goods on consignment to consignee) should account for GST on his selling price to the consignee at the earliest of the following:

  1. When the sale is confirmed e.g. upon receipt of a letter of acceptance from the consignee;
  2. 12 months after the removal of the goods; or
  3. When a tax invoice is issued.

When the tax invoice is issued to the consignor within 14 days of event (1) or (2), the date of the tax invoice will be the time of supply.

Goods Sold on Terms Other Than Sale or Return

If the goods were sold on terms other than on sale or return prior to 1 Jan 2011, the consignor should account for GST on his selling price to the consignee at the earliest of the following:

  1. When payment in respect of the supply is received; or
  2. When the tax invoice in respect of the supply is issued.

The consignee (the person receiving goods on consignment from consignor) should account for GST on his selling price to the customer at the earliest of the following:

  1. When goods are delivered or made available to customer;
  2. When a tax invoice is issued; or
  3. When payment is received.

However, if the tax invoice is issued to the customer within 14 days of event (1), the time of supply will be the date of issue of the tax invoice. This is provided that payment has not been received from the customer.

The consignee may apply for self-billing on the supplies made to him by the consignor.

Issuing of Tax Invoice

Prior to 1 Jan 2011, the issuing of a tax invoice - and not any other type of invoice - is an event that will trigger the time of supply.

Effective 1 Jan 2011, the issuing of any type of invoice will be an event that triggers the time of supply. This includes a tax invoice as well as any document that serves as a bill for payment for supplies made by a GST-registered supplier.

An example of such document would be a debit note.

In general, documents such as sales orders, pro-forma invoices, statements of accounts and letters/ statements of claims are not considered as invoices for GST time of supply purposes. This is because these documents are often not billing for payments and would therefore not be treated as invoices based on normal commercial practices.

For more details, please refer to GST: Time of Supply Rules (e-Tax Guide, 459KB).

Concessionaire Goods

A concessionaire is a person who occupies a space in your store to sell their products.

For example, a cosmetic counter in your departmental store. The GST treatment on the sale of concessionaire goods depends on the contractual arrangement between you (the retailer) and the concessionaire.

When you regard the sale of concessionaire goods as your own sale, the GST treatment will be the same as that for goods on consignment. In such cases, the concessionaire is treated as the consignor and you are treated as the consignee.

When you do not regard the sale of concessionaire goods as your own sale, you do not need to account for GST. The concessionaire is supplying the goods to his customer directly. He needs to charge and account for GST on the sale of goods if he is GST-registered.

Returned Goods from Customers

Replacement of Returned Goods

When you replace the returned goods with similar goods, you (the supplier) can do either:

  • issue a credit note to 'cancel' a tax invoice issued previously (if any) and reissue a new tax invoice on the replaced goods; or
  • retain the original tax invoice, provided the goods are replaced for free.

When you replace the returned goods with goods of lower value than the original, you may issue a credit note for the difference in price and GST.

When you replace the returned goods with goods of a higher value than the original, you may issue an additional tax invoice on the price difference and the GST. This additional tax invoice must make reference to the original tax invoice issued.

For the required information to include on your credit note and tax invoice, please refer to Invoicing customers.

Refund for Returned Goods

You may have a returned goods policy where you will refund the selling price and GST of the defective goods returned. You should issue a credit note to your customer for the returned goods. The credit note must make reference to the original tax invoice issued.

For the required information to include on your credit note, please refer to Invoicing customers - credit note.

Sales Promotion

Discounts

In a sales promotion, you may offer your customers a discount on the selling price of your goods and services. Customers who make purchases with a VIP card are also entitled to a discount. In such instances, GST is chargeable on the net discounted price.

You are giving a 10% discount on the sale of a sofa set. The selling price of the sofa set (excluding GST) is $2,000. You should charge GST on the net discounted price of $1,800.

GST to be charged = 7% X $1,800 = $126

Free Gift Given for Purchase

You may give a free gift to your customer when he buys certain items. In such instances, the whole package (main items and free gift) will be treated as being sold for the price of the main items.

You are giving 1 free cupcake for every 10 cupcakes purchased. The price which your customer pays is $20.

You should charge GST on $20 for the whole package of 10 cupcakes and 1 free cupcake.

Vouchers Given Away for Free

No GST is chargeable when a voucher (including product voucher, discount voucher, voucher with monetary value stated or stored) is given away for free.

Redeemed for Goods without Consideration

Subsequently, when the voucher is redeemed for goods and no consideration (e.g. money) is received, you need to account for GST if the goods are worth $200 or more.

When the goods are worth less than $200, you do not need to account for GST.

Redeemed for Services without Consideration

When the voucher is redeemed for services and no consideration is received, you do not need to account for GST as deeming of supply is not required for the provision of free services.

When consideration is received (e.g. customer pays you) for the supply of goods and services upon redemption of the free voucher, you have to account for GST on the consideration received.

You give a $20 voucher to your customer for free. The voucher can be used in his next purchase.

When he buys a bag priced at $100 and uses this voucher to offset his payment, the GST to be accounted for on the amount that your customer pays is 7/107 of $80 (i.e. $100 - $20 = $80).

For information on the sale and redemption of vouchers, please refer to Vouchers.

Rebates Received from Supplier

The GST treatment for rebates depends on the circumstances in which the rebate is given.

Rebates Received for Exceeding Certain Purchase Amounts

You may receive a volume rebate from your supplier for making purchases above a certain amount. The rebate is equivalent to a discount given for past purchases.

When your supplier is GST-registered, he should issue a credit note showing GST to you. You must then reduce your input tax claim based on the credit note received.

When the rebate is used to offset against the value of your next purchase, your GST-registered supplier should charge GST on the net purchase value (i.e. after deducting the rebate) of that purchase.

Rebates Received for Separate Services Provided to Supplier

When you need to meet certain obligations imposed by your supplier (e.g. undertake advertising and marketing activities) in order to receive a rebate, you are providing a separate supply of services to your supplier.

This is so even if the rebate received is based on your purchase volume from the supplier. You have to account for GST at 7/107 of the cash rebate received and issue a tax invoice to your supplier.

Selling Goods to Tourists

Under the Tourist Refund Scheme (TRS), tourists may receive a refund of GST on goods purchased from GST-registered retailers who participate in the scheme. TRS is available to tourists who are bringing their purchases out of Singapore via Changi International Airport or Seletar Airport, within 2 months from the date of purchase and subject to the tourists' eligibility and conditions of the scheme.

For information on the procedure and conditions, please refer to Tourist Refund Scheme.

  • Can I display price excluding GST?

    No. You must show GST-inclusive prices on all price displays and advertisement or publicity brochures. From 1 Apr 2015, if you choose to display both GST-inclusive and GST-exclusive prices, the GST-inclusive price must be at least as prominent as the GST-exclusive price. Failure to comply with each of these requirements is an offence that can result in a fine of up to $5,000.

    An exception is made for businesses in the hotel and food & beverage (F&B) industries. Due to the imposition of service charge, these businesses may have operational difficulties in displaying GST-inclusive prices.

    Therefore, they may display GST-exclusive prices for goods and services that are subject to service charge. However, a statement informing customers that prices displayed are subject to GST and service charge must be prominently shown.

  • I am selling goods to my customer for $10,000. I choose to absorb the GST payable by my customer. How should I report for GST? Do I need to reflect the GST amount in my tax invoice?

    You have to treat the sum of money received from your customer (i.e. $10,000) as inclusive of GST. The GST amount is derived by multiplying the selling price by the tax fraction 7/107.

    In your GST return, you need to account for the GST amount as your output tax and the amount payable excluding GST as your standard-rated supply.

    GST = $10,000 X 7/107 = $654.21

    Amount payable excluding GST = $10,000 - $654.21 = $9,345.79

    Your tax invoice should still show the GST as a separate amount. If you issue receipts or simplified tax invoices, you can state the GST-inclusive prices and indicate with the words "Price payable is inclusive of GST".

  • Do I account for GST on deposit collected from my customer?

    When the deposit forms partial payment for the goods or services supplied, GST has to be charged on the amount of deposit and accounted for in the accounting period in which the deposit is received.

    However, the goods may have been removed / made available or the services may have been performed before the deposit / down payment is received.

    In such cases, GST must be accounted for on the full selling price, based on the time of supply rule.

    When the deposit is refundable and used as a security, GST is not chargeable. For example, a deposit imposed for the safe return of goods.

  • The total GST payable on my supply of goods and services shown on a tax invoice is $8.128. How should I round off the amount?

    The total GST payable may be rounded off to the nearest whole cent (i.e. $8.13).

    With the discontinuation of the issuing of one cent coins, you may round your bills to the nearest five cents to facilitate cash payment by your customers.

    Whether a bill should be rounded up or rounded down to the nearest five cents is a business decision.

  • My customer trades his old equipment in for a new equipment. The retail price of the new equipment is $400. The trade-in value of old equipment is $300. My customer will pay an additional $100 to me to get the new equipment. How should I charge GST?

    A trade-in transaction is treated as two  separate supplies for GST purposes. The supplier must charge GST on the full selling price of your goods and not on the net difference only.

    You should charge GST on the full retail price (i.e. $400) of new equipment and issue a tax invoice to your customer. If your customer is also GST-registered, he has to charge GST on the trade-in value of the old equipment (i.e. $300) and issue a tax invoice to you.

  • If I sell my goods on sale or return terms, when do I account for GST?

    For goods sold on sale or return terms, the sale does not take place until the customer approves the goods to confirm the sale. The time of supply is the earliest of the following:

    1. When the sale is confirmed e.g. upon receipt of a letter of acceptance from your customer;
    2. 12 months after the removal of the goods; or
    3. When a tax invoice is issued.

    When the tax invoice is issued within 14 days of event (1) or (2), the date of the tax invoice will be the time of supply.

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