Expenses Incurred on Behalf of the Company
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 for purchases if the tax invoices are not addressed to your company name.
However, input tax claims can be allowed if you can prove that your employee is acting as an agent of your company (i.e. the taxable person) in receiving the supply of goods or services.
For example, you should maintain evidence of reimbursements made to the employee and recognise the bills as business expenses in your accounts.
Please note that your input tax claims are also subject to the following conditions:
- 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; and
- The input tax claims are not disallowed expenses under Regulations 26 and 27 of the GST (General) Regulations.
Separating 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 separate the business expenses from the private expenses. The GST incurred for private expenses is not claimable.
Example: Separating Business and Personal Expenses
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 reimburses him for all his calls.
For the purpose of claiming input tax, you have to separate the bill into private and business expenses.
The GST incurred for the making of private calls is not claimable. The GST incurred for the making of business calls is claimable if you can prove that the employee is acting as an agent of your company.