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.
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Property Transactions by Non-Legal Entities
Under the GST Act, non-legal entities such as partnerships (including limited partnerships but excluding limited liability partnerships), charities, societies and other unincorporated bodies can be registered for GST. Therefore, 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.
Due to the lack of legal capacity, non-legal entities may hold properties (both movable and immovable properties and intellectual properties) that they use for their business through legal entities that act as bare trustees for the non-legal entities. A bare trustee can be any individual or a company appointed or set up solely for the purpose of holding the properties on behalf of the non-legal entities. In the case of partnership, the bare trustee can be the partner(s) holding partnership property on behalf of the partnership. Generally, these bare trustees have no duties to perform other than to act on the instructions of the non-legal entities when supplying the property.
Claiming of Input Tax
The GST-registered non-legal entities may claim input tax for the GST incurred on properties acquired through their bare trustees.
To claim input tax* on properties (both movable and immovable properties and intellectual properties) acquired through a bare trustee, the GST-registered non-legal entity must keep the following:
- Tax invoice addressed to the bare trustee; and
- Documents (e.g. trust deed) or records showing that the purchase is made by the bare trustee on behalf of the GST-registered non-legal entity.
*subject to conditions for input tax claim
Accounting of Output Tax
Similarly, the non-legal entities will be required to account for output tax on supplies of properties made on their behalf by the bare trustees. The requirement to account for output tax will also apply to deemed supplies such as the following:
- Properties given away for free (click here for more information);