3A Accounting System

Thursday, February 26, 2015

Good news! No GST on maintenance fees for all high-rise units

Maintenance fees for all types of stratified residential properties will now be exempted from the goods and services tax (GST), Deputy Finance Minister Datuk Ahmad Maslan said today.

Sunday, February 15, 2015

Accounting entry (Balance sheet and Profit & Loss) by GST Tax Code

The table below show accounting balance sheet and profit & loss entry by commonly used tax codes.
Besides, it also show the entry implication to GST-03 form for GST submission.
Any comment are welcome for the sample tax entry table.


Monday, February 9, 2015

Accounting Software GST Certified

Accounting software need to be GST compliances.

The following is the link from government portal for the list of accounting software which is GST certified.

http://gst.customs.gov.my/en/ib/SiteAssets/Syarikat%20Perisian%20Berdaftar%20GST%20as%20at%204%20Februari%202015.pdf

What is Place of Supply?

Takeaway:-

  • The place of supply of goods or services is where the supply is made or treated to be made. 
  • A supply of goods or services will be within the scope of GST and therefore chargeable to GST if the place of supply is in Malaysia. 
  • Supplies made outside Malaysia are considered to be out of the scope of GST.


Rule for Supply of Goods

Supply of goods is in Malaysia

  1. Local Supply (from a location in Malaysia to another location in Malaysia) or
  2. Export  (from a location in Malaysia to a location outside Malaysia)

Supply of goods is outside Malaysia

  1. Out of Scope (from a location outside Malaysia to another location outside Malaysia)
  2. Import ( from a location outside Malaysia to a location in Malaysia, the goods are subjected to GST on importation unless the importation is done under a suspension or relief arrangement. )

Rule for Supply of Services
A supply or services shall be deemed as made
In Malaysia, if the supplier belongs in Malaysia; and
Outside Malaysia, if the supplier belongs in the other country

What is Capital Goods?

Capital goods are normally defined as follows:-
- any goods which are capitalized for accounting purposes and in accordance with Generally Accepted Accounting Principles (GAAP) and,
- written off over several years.

The GST treatment on capital goods in Malaysia is as follows:-
(a) A supply of capital goods is standard-rated.
(b) Input tax can be claimed in full on all capital goods that are used to make wholly taxable supplies
(c) If capital goods are used solely for exempt-supply, no input tax can be claimed.
(d) Where capital goods are used for making both taxable and exempt supplies, input tax would need to be apportioned according to its proportional taxable use.
(e) Intangible assets such as trademark and goodwill are taxable supplies.

How long it takes for GST to be refunded?


Takeaway:-
  • Online Submission - 14 working days
  • Manual Submission - 28 working days
  • Reserved more cash flow
  • Assess need of creating one time fund for GST Claimable amount

Saturday, February 7, 2015

What is GST 03 Form?

Contents:
  • GST 03 Form is Good and Service Tax Return Form
  • Output Tax > Input Tax = Pay to Customs
  • Input Tax > Output Tax = Refund from Customs
  • It required to be furnished to the Director General not later than the last day of the month following the end of the taxable period. E.g. Taxable period end at 30th April 2015, GST Submission last day for taxable period April is at 31st May 2015.
  • Refund from customs 14 days if filed electronically or 28 days if filed manually
  • It can be submitted through the following channels:-
  1. by electronically;
  2. by posting to GST Processing Centre; or
  3. by furnishing to the GST Processing Centre
You might also interested on:-
It consists for the following information: -
1) GST No.

2) Name of Business

4) Return and Payment Due Date

5a) Output Tax - Total Value of Standard Rated Supply
      SR + DS (Excluding Tax)
5b) Output Tax - Total Output Tax (inclusive of Bad Debt Recovered and other Adjustments)
      SR +  DS + AJS (Tax Value Only)

6a) Input Tax - Total Value of Standard Rated Acquisition
      TX + IM + TX-E43 + TX-RE  (Excluding Tax)

6b) Input Tax - Total Input Tax (inclusive of Bad Debt Relief and other Adjustments)
      TX + IM + TX-E43 + TX-RE +  AJP

7) GST Amount Payable (Item 5b – Item 6b)

8) GST Amount Claimable (Item 6b – Item 5b)

9) Do you choose to carry forward refund for GST?

10) Total Value of Local Zero-Rated Supplies
      ZRL

11) Total Value of Export Supplies
      ZRE

12) Total Value of Exempt Supplies
      ES43 + ES

13) Total Value of Supplies Granted GST Relief
      RS

14) Total Value of Goods Imported under Approved Trader Scheme
      IS (Excluding Tax)

15) Total Value of GST Suspended under item 14
      IS (Tax Value only)

16) Total Value of Capital Goods Acquired
      TX (Capital good, Excluding Tax)

17) Bad Debt Relief
      AJP (Excluding Tax)

18) Bad Debt Recovered
      AJS (Excluding Tax)

19) Breakdown Value of Output Tax in accordance with Major Industries Code

20) Name of Authorised Person

21) Identity Card No

22) Passport No.

23) Nationality

24) Date

25) Signature

How to calculate GST Taxable Period?


Takeaway:-
  • Every taxable person will be assigned a taxable period which will be end on the last day of the month of any calendar year unless a varied taxable period has been assigned. The category of a taxable period will be depend on the amount of annual sales
  • There are 2 category of Taxable Period, which is category A & B.
  • Category A - Annual Sales is RM5 Million and above, Taxable period is One month

  • Category B - Annual Sales is Less than RM5 Million, Taxable period is Three months

Friday, February 6, 2015

What is GAF File?


Takeaway:-
  • GAF file is a file containing a standard set of accounting information set out in custom guide. 
  • Business should have given flexibility of generating GAF file by specifying the time period
  • It can be either in text file format or XML format
  • If it is text file format, the delimiter in use is "pipe" between each column.
  • It should be digital text content instead of image
  • GAF file consists of C (Company info), P (Purchase records), S (Sales records), L (General Ledger transaction) and F (Accuracy checking) records/

You might interested on GST GAF File Tester & Reader. View More.

Thursday, February 5, 2015

GST Tax Code for Output Tax

Tax Code
Tax Rate
Description
6%
Standard-rated supplies with GST
Charged.
0%
Local supply of goods or services which are subject to zero rated supplies.
ZRE
0%
Exportation of goods or services which are subject to zero rated supplies.
ES43
0%
Applicable to GST registered trader that makes both taxable and exempt supplies (or commonly known as partially exempt trader).

Incidental Exempt Supplies include interest income from deposits placed with a financial institution in Malaysia, realized foreign exchange gains or losses, first issue of bonds, first issue of shares through an Initial Public Offering and interest received from loans provided to employees, factoring receivables, money received from unit holders for units received by a unit trust etc.
DS
6%
Deemed supplies (e.g. transfer or disposal of business assets without consideration).
0%
Out-of-scope supplies.
0%
Exempt supplies under GST
RS
0%
Relief supply under GST.
E.g. Supply to Government, seller have to get approval letter from buyer
GS
0%
Disregarded supplies
AJS
6%
Any adjustment made to Output Tax e.g : Longer period adjustment, Bad Debt recover, outstanding invoice > 6 months& other output tax adjustments.

GST Tax Code for Input Tax

Tax Code
Tax Rate
Description
TX
6%
Purchases with GST incurred at 6% and directly attributable to taxable supplies.
IM
6%
Import of goods with GST incurred.
IS
0%
Imports under special scheme with no GST incurred (e.g. Approved Trader Scheme, ATMS Scheme)
BL
6%
Purchases with GST incurred but not claimable (Disallowance of Input Tax) (e.g. medical expenses for staff). Refer to topic "What is Blocked Input Tax"
NR
0%
Purchase from non GST-registered supplier with no GST incurred.
ZP
0%
Purchase from GST-registered supplier with no GST incurred. (e.g. supplier provides transportation of goods that qualify as international services).
EP
0%
Purchases exempted from GST. E.g. purchase of residential property or financial services.
OP
0%
Purchase transactions which is out of the scope of GST legislation (e.g. purchase of goods overseas).
TX-E43
6%
Purchase with GST incurred directly attributable to incidental exempt supplies.
TX-N43
6%
Purchase with GST incurred directly attributable to non-incidental exempt supplies.
TX-RE
6%
Purchase with GST incurred that is not directly attributable to taxable or exempt supplies.
GP
0%
Purchase transactions which disregarded under GST legislation (e.g. purchase within GST group registration).
AJP
6%
Any adjustment made to Input Tax e.g.: Bad Debt Relief & other input tax adjustment.

What is Out-of-scope Supplies?

  • Non business supply;
  • Supply of goods made outside Malaysia;
  • Supply of services made by a person who does not belong in Malaysia
  • other than the supply of imported services;
  • Business below threshold;
  • Government supply except selected prescribed services;
  • Supply by statutory bodies and local authorities with respect to regulatory and enforcement functions; and
  • Supply of goods or services made within or between designated areas(Labuan, Langkawi and Tioman) except selected prescribed goods or services. 

What is Zero Rated Supply?


  • Businesses are eligible to claim input tax credit in acquiring these supplies, and charge GST at zero rate to the consumer.
  • Is a Government effort to help to relieve the burden of the poor
  • More than 900 goods and services in the zero-rated list.
  • Full list of zero rated supplies can be refer to here, resources from Government official portal.
  • *** Updated on 2015/03/27, government had updated the document. Please find updated document from here (GOODS AND SERVICES TAX (ZERO-RATED SUPPLY) (AMENDMENT) ORDER 2015)

What is Exempt Supply?


  • Businesses are not eligible to claim input tax credit in acquiring these supplies, and cannot charge output tax to the consumer.
  • Is a Government effort to help to relieve the burden of the poor
  • Full list of exempt supplies can be refer to here, resources from Government official portal.
  • *** Updated on 2015/03/27, government had updated the exempted supply list, latest list can be downloaded from here (GOODS AND SERVICES TAX (EXEMPT SUPPLY) (AMENDMENT) ORDER 2015)

What is Standard rated supply?

  • Standard-rated supplies are goods and services that are charged GST with a standard rate. 
  • GST is collected by the businesses and paid to the government. 
  • They can recover credit back on their inputs. 
  • If their input tax is bigger than their output tax, they can recover back the difference.
  • Business are practicing Automatic Deduction Mechanism, in which business are allowed to offset input tax against output tax.


What is Time of Supply / 21 Days Rule ?

Quoted from Customer General Guide

86. The time of supply is the time when a supply of goods or services is treated as being made. It is important to determine the time of supply because a taxable person should charge GST at the time when the supply is made. Consequently he accounts for GST for the taxable period in which the time of supply occurs unless he is allowed to account GST under payment basis.

Why Time Of Supply is important?

It is crucial to determine the Actual Tax Point from Time Of Supply as it simply means that when a taxable person should account for GST.
Understand how to determine Basic Tax Point or Actual Tax Point from Time of Supply:-

  • Basic Tax Point
  • Actual Tax Point


88. In general, the basic tax point is when:
(a) goods are removed or when goods are made available to a customer;
or
(b) services are performed. 

87. There are general rules for determining the time of supply. However, in certain cases and in particular situations there are special times of supply rules to be applied. It is essential to note that where a special time of supply rule applies, it will override the general rule. 

Time of Supply Rules
Rule 1 : 21 Days Rule
           Tax invoice is issued within 21 days after Basic Tax Point
           Time of Supply = Tax invoice date


Rule 2 : Basic Tax Point – 21 Days Delivery Order
          Tax invoice is issued more than 21 days after Basic Tax Point
     Time of Supply = Basic Tax Point


Rule 3: Advance Payment/Invoice
             Time of Supply= payments received and/or 
             tax invoice issued, whichever is earlier.



Takeaway:-
  • Understand Time of Supply is crucial to determine the Actual Tax Point from Time of Supply as it simply means that when a taxable person should account for GST. 

What is Output Tax?

  • Output tax is GST charged and collected on sales or supplies of goods and services
  • In short it is business chargse on sale of output


Takeaway:-

What is Blocked Input Tax?

Blocked Input Tax is non-claimable input tax.

Quoted from General Guide, section 192, the following are Input Tax not allowed to claimed:-

192. Input tax incurred by a taxable person in respect of the following supplies shall
be excluded from any credit under GST:-
(a) the supply to or importation by him of a passenger motor car;
(b) the hiring of a passenger motor car;
(c) club subscription fee;
(d) medical and personal accident insurance premium;
(e) medical expenses;
(f) family benefits; and
(g) entertainment expenses to a person other than employees or existing customers except entertainment expenses incurred by a person who is in the business of providing entertainment.

Takeaway:-
  • Assets purchased for personal use in not claimable

What is Input Tax?


According to custom definition, input tax is the GST incurred on any purchase or acquisition of goods and services by a taxable person for the purpose of making a taxable supply in the course or furtherance of business.

Takeaway:-

  • Understand the input tax allowed to claimed and whether you are entitled to claim the input tax
  • Can set off against collected tax
  • Input tax is allowed to be claim within 6 years from the date input tax is incurred
  • Not all input tax are claimable, refer to Blocked Input Tax topic

Input Tax allowed to claimed
Quoted from General Guide, section 190, the following are Input Tax allowed to claimed:-
(a) a taxable supply (standard rated supply or zero rated supply);
(b) a disregarded supply such as supplies between group members registered under group registration;
(c) an incidental exempt supply such as an inter-company loan and loan to staff;
(d) a supply given relief; or
(e) supplies made outside Malaysia which would be taxable supplies if
made in Malaysia.

Criteria for Claiming Input Tax
Quoted from General Guide, section 191, Input tax incurred can be deducted from the output tax under the following conditions:-
(a) The claimant is a taxable person;
(b) The goods or services are acquired for the purpose of business;
(c) The goods or services are acquired for the purpose of making taxable supply;
(d) The claimant must hold a valid tax invoice in respect of a supply or a valid customs importation document Customs No. 1 in respect of importation of goods;
(e) A full tax invoice must be issued under the name of the claimant. A tax invoice issued under the name of employees will not be eligible for input tax credit; and
(f) The goods or services are not subject to input tax restriction such as passenger motor vehicle, family benefits and club subscriptions.



Wednesday, February 4, 2015

What is Goods and Services Tax (GST) in Malaysia?

  • GST (Good and Services Tax) is also named as VAT (Value Added Tax)
  • It is multi stage tax instead of single stage tax
  • The purpose of GST is to generate tax revenues to the government similar to the corporate income tax or the personal income tax..
  • It is also to eliminate weaknesses of the Sales Tax and Service Tax System
  • It will be implement on 1st April 2015
  • The standard GST rate is 6%
GST is charged on:-
(a) any taxable supply of goods and services;
(b) made in the course or furtherance of any business;
(c) by a taxable person;
(d) in Malaysia.
  • General GST mechanism with Standard Rate 6%


GST mechanism with Standard Rate 6%

  • Few topics you must read in order to understand GST:-
  1. What is Input Tax ?
  2. What is Output Tax ?
  3. What are the different type of supply ?
  4. What is Time of Supply ?
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