From 1 Jan 2019, you are required to apply customer accounting on a relevant supply of prescribed goods made to a GST-registered customer for his business purpose. A relevant supply is:
- a local sale of prescribed goods whose GST-exclusive sale value exceeds $10,000 and
- is not an excepted supply.
The prescribed goods are mobile phones, memory cards and off-the-shelf software.
Customer Accounting for Prescribed Goods
A mobile phone is one that:
- can transmit and receive spoken messages over a cellular network (whether or not it has any other function), and
- has a screen size of 17.5cm or less, measured diagonally from the top corner to a bottom corner, excluding the bezel. It excludes a mobile phone sold with a mobile subscription plan.
Examples of mobile phones that are prescribed goods for customer accounting:
- tablet that can transmit and receive spoken messages over a cellular network and has a screen size of 17.5cm or less
A memory card is an electronic flash memory data storage device used for storing digital information, and excludes any flash drive with integrated USB interface.
Examples of memory cards that are prescribed goods for customer accounting:
- Secure Digital "SD" card
- Memory Stick
An off-the-shelf software is one that is not customised for a particular customer and where:
- the software is stored in a CD or similar storage medium which is provided as part of the supply; or
- the software may be accessed by the use of a product key, license key, activation code or other similar key/code that is provided in or on a physical packaging as part of the supply.
It excludes any software that is pre-loaded into any machinery or equipment (including computer), and supplied as part of the machinery or equipment.
Examples of off-the-shelf software that are prescribed goods for customer accounting:
- anti-virus software sold in a boxed package
- accounting software sold in a boxed package
- electronic design automation software sold in a disc
- Xbox or PlayStation games software sold in a disc
- software downloadable from the Internet which is accessed by a product key or license key that is enclosed in or printed on the physical package supplied to the customer
Back-up copy of a software stored in a CD or similar storage medium that is provided to the customer and software downloadable from the Internet which is accessed by a product key or license key sent to the customer via email are not 'off-the-shelf software' for customer accounting purposes.
The excepted supplies that are not subject to customer accounting are:
- A supply of goods made under the Gross Margin Scheme
- A supply of goods made under the Approved Third Party Logistics Company Scheme or Approved Refiner and Consolidator Scheme to an approved/specified person
- A deemed taxable supply of goods arising from the transfer or disposal of goods for no consideration
When to Apply Customer Accounting
For customer accounting to apply, your customer must be a GST-registered person purchasing the prescribed goods in the course of carrying on a business.
If your sale includes both prescribed goods and non-prescribed goods/services, you should only use the GST-exclusive sale value of the prescribed goods to determine whether your supply exceeds the threshold of $10,000 for customer accounting to apply. Customer accounting does not apply to the sale of non-prescribed goods/services, regardless of its value.
Customer accounting shifts the responsibility to account for GST on the sale of prescribed goods from the supplier to the GST-registered customer. Thus you are not allowed to charge and collect GST from your customer if your sale is subject to customer accounting. However, you are still required to report the supply in your GST returns.
You are a GST-registered supplier making a relevant supply
If you make a relevant supply to a GST-registered customer, he will account for the output tax on this supply on your behalf.
You must issue a customer accounting tax invoice to your customer, showing the following details in addition to the details required for a tax invoice:
- Your customer's GST registration number;
- A statement to inform the customer that your sale is subject to customer accounting, that he has to account for the GST on the sale and the GST amount.
You are required to report the GST-exclusive value of the prescribed goods sold in Box 1 "Total value of standard-rated supplies" of your GST return based on the normal time of supply rules. As you are not allowed to charge GST on a relevant supply made to a GST-registered customer, there is no output tax to be reported under Box 6 "Output tax due".
For an overview of how your sales of prescribed goods will be affected under the new rule, please refer to flowchart (PDF, 327KB).
You are a GST-registered customer receiving a relevant supply
If you (i.e. the customer) receive a relevant supply, you will account for the GST chargeable on your supplier's behalf as your output tax. You will report the GST-exclusive value of the prescribed goods purchased in Box 1 "Total value of standard-rated supplies" and the GST amount in Box 6 "Output tax due" of your GST return based on the normal time of supply rules.
You will be able to claim the input tax on the purchase if it is for your business use and the making of your taxable supply. You will report the value of the prescribed goods purchased in Box 5 "Total value of taxable purchases" of your GST return and claim the GST as your input tax in Box 7 "Input tax and refunds claimed" if you satisfy the input tax claiming conditions which includes holding a valid customer accounting tax invoice.
For an overview of how your purchases of prescribed goods will be affected under the new rule, please refer to flowchart (PDF, 326KB).
For more information, please refer to e-Tax Guide GST: Customer Accounting for Prescribed Goods (PDF, 434KB).
I am not in the business of buying and selling prescribed goods. Am I affected by customer accounting?
Although you may not be in the business of buying and selling prescribed goods, you may purchase or sell these goods on an occasional basis. Customer accounting will apply to all GST-registered businesses buying and selling the prescribed goods, regardless of whether the sales and purchases form part of the businesses’ regular activities. You are encouraged to review the flowcharts provided to understand whether you will be affected by the new rule.
How do I know whether my customer is registered for GST and is purchasing the goods for his business use?
You can verify your customer’s registration status via the ‘Register of GST-Registered Businesses’ on IRAS’ website (www.iras.gov.sg). If the purchase of prescribed goods is for non-business use, the onus is on your customer to inform you so. You may require your customer to confirm in writing that his purchase of prescribed goods is for non-business use.
As a supplier, can I opt to charge and collect GST regardless of the value of prescribed goods supplied?
Applying customer accounting is mandatory when the value of supply of prescribed goods to a GST-registered customer (for his business use) exceeds $10,000. You have the option to apply customer accounting if the value of the supply is less than or equal to $10,000 provided that certain conditions are met. Please refer to the e-Tax Guide for details on the conditions.
As a customer, can I opt to pay GST to my suppliers even if customer accounting is to be applied for my purchase of prescribed goods?
Applying customer accounting is mandatory when the value of supply of prescribed goods to a GST-registered customer (for his business use) exceeds $10,000. Your supplier does not have the option to charge GST on a supply liable to customer accounting.
As a customer, you are required to account for the output tax on your supplier’s behalf and can claim the input tax in your GST return if the input tax claiming conditions are satisfied.
Should you make occasional purchases of prescribed goods and wish to be exempted from the requirement to report both the output tax and input tax in your GST return, prior approval from the Comptroller may be sought provided you satisfy certain conditions. You may refer to the e-Tax Guide for more information.