Common scenarios - Do I charge GST

Recovering Expenses

The GST treatment for the recovery of expenses from another party such as your employees, customers, related corporations or suppliers, depends on whether the expenses are incurred by you as a principal or as an agent.

Employee Benefits

Goods and services given free to employees as part of their overall remuneration package are known as fringe benefits. The GST treatment for fringe benefits is explained in the following paragraphs.

GST on Discounts and Rebates

Charging and accounting for GST when you provide discounts and rebates such as prompt payment discounts and volume rebates.

Gifts and Samples

Businesses may provide gifts and samples to their clients or prospective customers in the course of their business activities. Goods that you give away for free are treated as a supply that you make to the recipient.

Bad Debt Relief

When debts cannot be recovered, you may apply for bad debt relief to recover GST charged but unpaid by your customers. Should your customer subsequently pay you, you must repay the relief claimed.

Expenses Incurred by Employee on Behalf of the Company

You are not allowed to claim input tax for purchases if the tax invoices are addressed to your employee unless you can prove that the employee is acting as an agent of the company in receiving the supply of goods or services. For tax invoices containing both business and private expenses, the GST incurred for private expenses is not claimable.

Purchase and Sale of Motor Vehicles

You may claim the GST incurred on the purchase of a motor vehicle if it is not disallowed under the GST law. You need to account for GST when you sell the motor vehicle even if you are not entitled to claim input tax for the purchase.

Provision of service to overseas customer

Your services are considered international services, which are zero-rated (i.e. GST is charged at 0%), if they fall within the provisions under Section 21(3) of the GST Act. Depending on the nature of your services, you may be required to determine your customer's belonging status (i.e. whether the customer is a local or an overseas entity) before your supply of services can be zero-rated.

Deposits and Downpayment

Sale and Disposal of Business Assets

Business assets include old furniture, office equipment and non-residential property. Generally, you have to account for GST (i.e. output tax) when you: (a) sell your business assets (including disposal of or transfer of asset to another party with consideration received); and (b) dispose of, transfer or give away your business assets for free and these assets still have market value, unless exceptions apply.

Supplying to Overseas customers with Local Delivery Address

GST must be charged on any goods sold or delivered in Singapore even if the goods are meant for overseas customers unless the exception applies.

Returned Goods

Documents to issue when you replace or give a refund for returned goods.

Absorbing GST

To maintain competitiveness and customer goodwill, you may choose to absorb the GST payable by your customer. In doing so, you have to treat the sum of money received from your customer as inclusive of GST.

Vouchers

The GST treatment of a voucher depends on whether it is a Multi-Redemption Voucher (MRV) or a non Multi-Redemption Voucher (non-MRV), and whether it is sold by the issuer or intermediary.

Compensation

Compensation is a sum of money the aggrieved party receives from the defaulting party due to certain obligations/conditions in the contract not met.

Tourist Refund Scheme (TRS)

GST-registered businesses may provide GST refunds to tourists as an independent retailer or by engaging the services of a Central Refund Agency. In either case, they need to do so under the electronic Tourist Refund Scheme (eTRS).

Provision of subsidised services

Whether GST is chargeable on the full (gross) or subsidised (net) value of the services depends on whom the subsidies/grants are awarded to (i.e. the GST-registered supplier or customer).

Secondment of Staff

When you assign your employee to work for another company under a secondment arrangement, you may recover salary and staff related costs from that company. The secondment is regarded as a provision of human resource services i.e. there is a supply. Generally, the recovery of expenses relating to the secondment is subject to GST.

Transferring Businesses

When a business is transferred, business assets are usually transferred. This is similar to a sale or disposal of business assets. The GST-registered transferor has to account for GST on the supply.

Receiving Grants

Outright grants, with no direct benefits given to the grantor, are not subject to GST.

Receiving Donation and Sponsorship

Outright donations, with no benefits given to the donor, are not subject to GST.

Discounted Sale to Employees

When goods are sold at a lower price to your employees, GST is accountable on the net amount paid after the discount.

Payment from Employee to Retain Gifts Received from Others

The GST treatment for the sum of money paid by an employee to you (the employer) for receipt of a gift from a third party depends on who the gift belongs to.

Trade-Ins

A trade-in transaction is treated as two separate supplies for GST purposes. When you accept trade-ins, you (the supplier) must charge GST on the full selling price of your goods and not on the net difference.

Non-Business or Private Use of Business Assets

You are required to account for GST when your business assets are put to private or non-business use for free, if you have been allowed input tax on the purchase or import of those assets.

Sale of Property by a Partner

When you sell or lease non-residential property, GST is applicable if you are GST-registered.

Interest Relating to Bank Deposit / Loan / Trade Debt

You must report interest from bank deposits, loans and trade debts when you file your GST returns whether received from a local or overseas entity.

Hire Purchase

When a financier enters into a hire purchase agreement with a hirer, the financier makes two supplies to the hirer for GST purposes. They are the supply of goods and the supply of financial service (instalment credit finance).

Property Transactions by Non-Legal Entities

Like any other GST-registered persons, GST-registered non-legal entities are entitled to claim input tax and required to account for GST on the purchase and supply of business properties respectively.

Selling / Renting Assets to Recover Debts

Assets (e.g. property, equipment) belonging to a business may be sold or rented by a third party such as a creditor, to recover a debt. When the third party sells or leases an asset in satisfaction of a debt, he must account for GST on the sale proceeds or lease payments if the asset owner is GST-registered.

Mortgagee Sale / Lease

Assets (e.g. property, equipment) belonging to a GST registered mortgagor may be sold or rented out by the mortgagee in satisfaction of a debt.