3A Accounting System

Thursday, February 5, 2015

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. 

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