When purchasing from GST-registered suppliers or importing goods into Singapore, you may have incurred GST (input tax). You can claim the input tax incurred when you satisfy all of the conditions for making such a claim. You should only claim input tax in the accounting period corresponding to the date of the invoice or import permit.
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Conditions for claiming input tax

Conditions for claiming input tax

You can claim input tax incurred on your purchases only if all the following conditions are met:

1. You are GST-registered;

2. The goods or services are supplied to you or imported by you;

3. The goods or services are used or will be used for the purpose of your business;

Determining goods and services "for the purpose of business"

Goods and services are considered to be used "for the purpose of business" when they can be attributed to business activities mainly concerned with making supplies for a consideration (e.g. payment in either money or in kind).

Examples of non-business activities:

  • Activities with non-business objects in philanthropic, religious, political, patriotic or public domain

  • Free activities provided without commercial reasons

  • Activities that are purely private or personal If you have both business and non-business activities, you can only claim input tax attributable to business activities relating to taxable supplies.

Please refer to GST on Non-Business Receipts (584KB) on determining your business and non-business activities, and how to apportion your input tax claims (where necessary).

4. Local purchases are supported by valid tax invoices addressed to you, or simplified tax invoices, at the time of claiming of the input tax;

Examples of invalid tax invoice

Some common examples of tax invoices which are not valid are:

Missing details on the tax invoice

  • The supplier's name, address and GST registration number are not shown.
  • For purchases >S$1,000, the words "tax invoice", name of customer or GST amount is not shown.
  • For purchases ≤ S$1,000, the GST amount or a statement similar to "price payable includes GST" is not shown.
  • For purchases in foreign currency, the Singapore dollar equivalent amounts are not shown.

Supplier is not GST-registered

  • Your supplier does not have a GST registration number or the GST registration number shown has expired/is not valid.
  • You can check on your supplier's GST registration status, period of registration and GST registration number using the GST Registered Business Search.

Illustration of an invalid tax invoice

Taxinvoice rate change 3

If the invoice issued by your supplier contains the above errors or has any other missing details, you should request that your supplier re-issues you a valid tax invoice before you proceed to make the input tax claim. You do not need IRAS’ approval to make the request from your supplier for a valid tax invoice.

5. Imports are supported by import permits that show that you are the importer of the goods and other supporting documents such as the supplier's invoices and relevant transport documents;

6. The input tax is directly attributable to taxable supplies (i.e. standard-rated supplies and zero-rated supplies), or out-of-scope supplies (e.g. third country sale of goods), that would be taxable supplies if made in Singapore;

7. The input tax claims are not disallowed under Regulations 26 and 27 of the GST (General) Regulations; and

Disallowed input tax claims

Regulations 26 and 27 of the GST (General) Regulations do not allow you to claim input tax incurred on the following expenses:

  • Benefits provided to the family members or relatives of your staff;
  • Costs and running expenses incurred on motor cars that are either:
    • registered under the business' or individual's name, or
    • hired for business or private use, except where the car is excluded from the definition of a 'motor car' in Regulation 25(1) of the GST (General) Regulations. For more information, please refer to the table on "Input tax treatment for common expenses" below;
  • Club subscription fees (including transfer fees) charged by sports and recreation clubs;
  • Medical expenses incurred for your staff unless
    1. the expenses are obligatory under the Work Injury Compensation Act or under any collective agreement within the meaning of the Industrial Relations Act; or
    2. the medical treatment in respect of expenses incurred on or after 1 Oct 2021 is provided in connection with any health risk or requirement arising on account of the nature of the work required of your staff or his work environment; and
      1. the medical expenses are incurred pursuant to any written law of Singapore concerning the medical treatment or the provision of a medical facility or medical practitioner; or
      2. the medical treatment is related to COVID-19 and the staff undergoes such medical treatment pursuant to any written advisory (including industry circular) issued by, or posted on the website of, the Government or a public authority of Singapore.
  • Medical and accident insurance premiums incurred for your staff unless the insurance or payment of compensation is obligatory under the Work Injury Compensation Act or under any collective agreement within the meaning of the Industrial Relations Act; and
  • Any transaction involving betting, sweepstakes, lotteries, fruit machines or games of chance.

8. You have taken reasonable steps to ascertain and concluded that the goods or services were not part of a Missing Trader Fraud arrangement and the conclusion is one that a reasonable person would have made.

Determining input tax claims on common items

Input tax treatment for common expenses

Item

Can I claim input tax?

Expenses incurred by employees on behalf of the company
E.g. Expenses incurred for making business calls using employee's personal mobile phone
  • Subject to the conditions for input tax claim, such claims are allowed if you can prove that the employee is acting as an agent of the taxable person (i.e. the business) in receiving the supply of goods or services.
  • For example, you are able to provide evidence of reimbursements made to the employee and have recognised the bills as business expenses in your accounts etc.
  • You need to segregate the business expenses from the private expenses. GST incurred for private expenses is not claimable.
Entertainment expenses
  • Subject to the conditions for input tax claim, these claims are allowed if you have the supporting tax invoice addressed to you or the simplified tax invoice if the purchase value (including GST) is not more than $1,000.
  • As an administrative concession, a receipt which contains all the information required in a simplified tax invoice can also be used to claim the input tax incurred for entertainment expenses exceeding $1,000 (including GST). You must also keep alternative documentary payment evidence and information on entertainment details (such as name of person entertained, purpose of entertainment, person incurring the expenses, etc.) to support your claim.
  • This concession is applicable only to expenses on food and drinks. In the event that an expense comprises of items other than food and drinks (e.g. rental of yacht), a proper tax invoice is still required to support the full claim.
Staff medical expenses
  • Input tax claims are disallowed under Regulation 26 of the GST (General) Regulations.
  • However, subject to the conditions for input tax claim, these claims are allowed if:
  1. the medical expenses (e.g. pre-employment and annual health screening expenses) are obligatory under the Work Injury Compensation Act (WICA) or under any collective agreement under the Industrial Relations Act (IRA); or
  2. the medical treatment in respect of expenses incurred on or after 1 Oct 2021 is provided in connection with any health risk or requirement arising on account of the nature of the work required of your staff or his work environment; and
  1. the medical expenses are incurred pursuant to any written law of Singapore concerning the medical treatment or the provision of a medical facility or medical practitioner. For example, mandatory medical examinations for staff under the Workplace Safety and Health (Medical Examinations) Regulations; or
  2. the medical treatment is related to COVID-19 and the staff undergoes such medical treatment pursuant to any written advisory (including industry circular) issued by, or posted on the website of, the Government or a public authority of Singapore.
  • To determine whether the medical expenses are obligatory under WICA, please visit the Ministry of Manpower (MOM) webpage on WICA or contact MOM at +65 6438 5122.  For clarification on collective agreements under IRA, please consult your trade union.
Medical and accident insurance premiums for your staff
  • Input tax claims are disallowed under Regulation 26 of the GST (General) Regulations.
  • However, subject to the conditions for input tax claim, you are allowed to claim input tax if such insurance or the payment of compensation is obligatory under the Work Injury Compensation Act (WICA) or under any collective agreement under the Industrial Relations Act (IRA).
  • For example, you can claim input tax for work injury compensation insurance that is obligatory under WICA for both local and foreign employees performing:
    • Manual work, regardless of salary level; or
    • Non-manual work, earning $2,600 or less a month.
    If you require more information on WICA, please visit the Ministry of Manpower (MOM) webpage on WICA, contact MOM at +65 6438 5122 or contact your insurance agent.
Cost and running expenses of motor vehicles
E.g. Cost incurred for purchase of car, lorry and motorcycle
E.g. Running expenses such as petrol and parking fees

Input tax incurred on purchase and running expenses of motor cars is disallowed under Regulation 27 of the GST (General) Regulations unless the car is excluded from the definition of a ‘motor car’ in Regulation 25(1). In addition, input tax incurred for specific scenarios is also excluded from the scope of Regulation 27. The input tax incurred in such specific scenarios will be claimable, subject to the conditions for input tax claim. The scenarios include:

Purchase of private hire car transportation services

From 1 Apr 2022 onwards, you can claim input tax incurred on the purchase of services to transport passengers from point A to point B (pay-per-trip) in a chauffeured private hire car (e.g. airport transfer services, etc), provided the other conditions for claiming input tax are met. This includes ensuring that your purchases are supported by valid tax invoices or simplified tax invoices with GST charged to you. For e.g., for limousine services, you will need to keep an invoice from the GST-registered business showing that GST has been charged on the services.

Expenses on motor car used by a third party

With effect from 1 Jan 2023, where you incur expenses on a motor car that is used by a third party*, you will be allowed input tax claims on the cost and running expenses of the motor car incurred, provided the conditions for claiming input tax are met. 

Where a motor car is used by you or your employees, the input tax incurred on motor car expenses remains disallowed under Regulation 27. Use of the motor car includes both physical use (e.g. motor car driven by your company staff or chauffeur to transport your company directors or business associates) and economic use (i.e., use of the car to generate income or make supplies e.g. a consultancy firm uses its motor car to transport its preferred clients for a fee).

*A third party refers to a person other than (i) you or your employees or (ii) a person (or its employees) who is connected to you within the meaning of paragraph 3 of the Third Schedule to the GST Act. 

Examples of when input tax is claimable, subject to the conditions for input tax claim:

  • Parking fees charged to you when your customers park their motor cars while visiting your business premises
  • Repair cost of your customer’s motor car which was damaged by faulty lighting at your car park

Expenses on motor car used by a connected person
With effect from 1 Jan 2023, where you incur expenses on a motor car used by a person connected to you within the meaning of paragraph 3 of the Third Schedule to the GST Act (e.g. a related company such as your subsidiary), you cannot claim input tax on the cost and running expenses of the motor car, unless you satisfy both of the following conditions (in addition to the conditions for claiming input tax):

  1. You recover the motor car expense in full from the connected person.
    Where you recover only a portion of the motor car expense incurred, you can only claim input tax to the extent of the portion recovered.
  2. The recovery is not ancillary to any primary supply made by you to the connected person.
    To determine whether the recovery is considered as ancillary to a supply made by you, please refer to the e-Tax Guide on “GST: Guide on Reimbursement and Disbursement of Expenses ” (PDF, 584KB).

In instances where both conditions (1) and (2) are met, the connected person will not be able to claim input tax on the motor car expenses recharged by you. Where the connected person is GST- registered, the input tax will be blocked under Regulation 27.

For other motor vehicles (e.g. lorry, van, motorcycle)

  • Subject to the conditions for input tax claims, input tax claims are allowed on motor vehicles that do not fall under the definition of a 'motor car' (i.e. constructed or adapted for the carriage of not more than seven passengers excluding the driver, and the weight of which unladen does not exceed 3,000 kilograms).

Purchase of goods that you gave away for free to customers, suppliers, staff etc.
E.g. Gifts, samples and lucky draw prizes
  • Input tax claims are allowed, subject to the conditions for input tax claim.
  • However, you may be required to account for output tax on the Open Market Value (OMV) of the goods if its cost exceeds $200. Refer to our website on Gift and Sample for more information.

Club subscription fees charged by sports and recreation clubs
E.g. Joining fee, subscription fee, membership fee and transfer fee

Input tax claims are disallowed under Regulation 26 of the GST (General) Regulations.

Expenses for use of club facilities
E.g. Green fees, buggy fees, rental of golf bag locker and dining at club restaurants

 Input tax claims are allowed, subject to the conditions for input tax claim.

Family benefits for staff
E.g. School fees for children of your expatriate staff

Input tax claims are disallowed under Regulation 26 of the GST (General) Regulations.

General insurance for the business
  • Input tax claims are allowed on general insurance expenses (e.g. fire insurance, burglary insurance, machinery risks insurance, trade cargo insurance), subject to the conditions for input tax claim.
  • As an administrative concession, input tax can also be claimed on public liability insurance. However, this does not apply if the premiums relating to the insurance coverage of medical costs for third parties can be separately identified. You can only claim GST incurred on the portion of premiums not relating to the coverage of medical costs.

GST/VAT incurred for purchases made overseas
E.g. GST charged to you under the Australian tax jurisdiction

Input tax claims are disallowed because the GST/ VAT was paid to a party outside of Singapore tax jurisdiction.

Properties purchased by non-legal entities

Subject to the conditions for input tax claim, 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.

Common errors on input tax claims

UPDATES – Since the publication of this series of videos, please take note of the following changes affecting input tax claims:

  • Changes to the input tax claiming rules for medical expenses and the cost and running expenses incurred on motor cars; and
  • The increase of GST rate from 7% to 8% with effect from 1 Jan 2023. 

Do keep these in mind when watching this series of videos on Common Input Tax Errors. 

Every year, around 3,000 GST-registered businesses are selected for audit and the most common mistakes discovered are incorrect input tax claims. On average, more than $18,000 in GST and penalties are recovered yearly from each business due to such errors.

Get to know the common input tax errors made by businesses and learn how you can avoid them through our series of videos!

 

FAQs

I satisfy all the conditions for input tax claim. How do I declare my purchases and input tax in GST return (F5)?

Total value of taxable purchases (Box 5):
Declare the value of all your imports, standard-rated and zero-rated purchases and expenses (excluding the GST amount) made in the course or furtherance of your business.

Input tax and refunds claimed (Box 7):
Declare the input tax (i.e. GST amount) incurred for your imports, standard-rated purchases and expenses made in the course or furtherance of your business.

The import permit shows me as the importer. I also receive an invoice from my supplier. Should I declare the value of taxable purchases and input tax based on the import permit or the invoice in my GST return (F5)?

You should declare the GST reflected in the import permit issued by Singapore Customs as your input tax in Box 7 of the GST return. Please ensure that there is no duplicate claim on the same purchase/ import.

However, for the value of taxable purchase in Box 5, you may declare either:

  1. The value of imports reflected on the import permit; or
  2. The value of goods reflected on your invoice.

Where the value reflected in the invoice issued by your supplier is different from the value reflected in the import permit, you should be able to reconcile the two values.

I have over-declared/under-declared my value of imports. What should I declare in my GST return (F5)?

Please refer to our webpage on Importing of Goods (Mistakes on import declarations).

I purchase goods from my local suppliers and they bill me in foreign currencies. Do I claim GST based on the amount converted using my own exchange rates?

Where purchases are negotiated in foreign currencies, your supplier has to indicate the GST payable on the tax invoice in Singapore dollars at a rate of exchange determined by him.

You should claim GST incurred on such purchases based on the Singapore dollar GST stated in the tax invoice. This requirement is still applicable even though you may have recorded the Singapore dollar value of the purchases in your own books at a rate of exchange different from that used by the supplier.

Can I claim input tax if I am not GST-registered?

No, you cannot claim any input tax if you are not GST-registered.

My business has stopped making taxable supplies and is in the process of winding down. I have incurred input tax on expenses (i.e. rental, utilities) which does not relate to any taxable supplies made earlier. Can I claim the input tax incurred as I am still GST registered?

One of the conditions for input tax claim is that the input tax incurred is directly attributable to the making of taxable supplies. As you do not satisfy this condition, you cannot claim the GST incurred on such expenses.

You should also cancel your GST registration since you have stopped making taxable supplies. Refer to our webpage on Cancelling GST Registration.

My company provides car rental services. I paid GST on the purchase of a used car from a second-hand car dealer. The used car was added to my fleet of rental cars for letting on hire. Can I claim the input tax incurred on the purchase?

Yes, you can claim input tax incurred on the purchase of the used car for letting on hire, provided your claim is made within five years from the end of the relevant GST accounting period.

My business provides private hire car services (e.g., limousine services) to chauffeur customers from point-to-point in Singapore. Can I claim input tax incurred on the running expenses of my limousines?

Yes, you can claim input tax incurred on the purchase and running expenses of your chauffeured private hire cars (e.g. limousines) used to provide transportation services or for the letting on hire on the basis that they satisfy Regulations 25(1) and 27, provided your claim is made within five years from the end of the relevant GST accounting period.

I am a GST-registered sole-proprietor selling clothes. I also hold a Private Hire Car Driver’s Vocational Licence (PDVL). As a vocation, I provide chauffeured ride services using a Private Hire Car (“PHC”) via mobile applications/platforms operated by booking service operators. Can I claim input tax incurred on the running expenses of my PHC?

Yes, you can claim input tax on the running expenses of your PHC incurred on or after 1 Jan 2023 in the course of providing the chauffeured ride services for a fee. However, the input tax incurred on private use of your PHC remains not claimable. You also cannot claim input tax incurred on the cost of purchasing the PHC as you can use the PHC for private purposes at times. As a GST-registered person, you will have to continue to account GST at the prevailing tax fraction on the fees pre-and post-1 Jan 2023.

I am a GST-registered individual. I hold a Private Hire Car Driver’s Vocational Licence (PDVL). I own 3 Private Hire Cars (“PHCs”). I provide chauffeured ride services using one of my PHCs via mobile applications/platforms operated by booking service operators. I also employ staff to drive my PHCs via the mobile applications/platforms. Can I claim input tax incurred on the running expenses of the PHCs?

Yes, you can claim input tax on the running expenses of your PHCs incurred on or after 1 Jan 2023 in the course of providing the chauffeured ride services for a fee. As an individual who carries on a business of providing chauffeur services, you can also claim input tax incurred on the cost of purchasing the PHCs only if you satisfy the following conditions, in addition to the normal input tax claiming conditions:

  1. You maintain a minimum fleet of 3 PHCs;
  2. You employ a minimum of 2 PHC drivers, in addition to yourself, to provide chauffeured ride services; and
  3. Your business is registered as a sole-proprietorship with the Accounting and Corporate Regulatory Authority of Singapore (ACRA).

As a GST-registered person, you will have to continue to account GST at the prevailing tax fraction on the fees pre-and post-1 Jan 2023.

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