Introduction to GST – Part 6

  • Accounting for GST (continued)

Input Tax Claim

The following are the prerequisite for Input Tax Claim:

  • The claimant must be a taxable person
  • The goods and services are acquired for the purpose of making taxable supply
  • The claimant must have a valid tax invoice
  • The tax invoice is issued under the name of the claimant
  • The goods and services acquired are not subject to any input tax restriction (for example, motorcars)

Mechanism for Input Tax Claim

The following are the mechanism for Input Tax Claim:

  • The tax paid on inputs can be offset against the output tax in the relevant taxable period subject to a time limit of 6 years from the date of return required to be made
  • Apportionment rules has to be applied when the taxable person makes a mixed supply
  • Any refund of input tax may be offset against other unpaid GST, customs and excise duties
  • The input tax will be refunded within 14 days for on-line submission and 28 working days for manual submission

Blocked Input Tax

The following are goods and services which have blocked input tax:

  • The supply to or importation of passenger motor car
  • Club subscription fees
  • Medical and personal accident insurance premium
  • Medical expenses
  • Family benefits
  • Entertainment expenses

No GST will be imposed on the subsequent supply of the above items.

Incidental Financial Supplies

The following exempt supplies are regarded  as taxable supplies for those who are making wholly taxable supplies:

  • Deposit of money
  • Exchange of currency
  • Issuance of equity security or debt security
  • Provision of loan, advance or credit to employees or connected person

Fringe Benefits

  • Fringe benefits include any right, privilege, service or facility provided free of charge to employees
  • All goods or services provided free to employees  are subject to GST except those exempted, blocked input tax and zero-rated goods
  • The value of the fringe benefits given, will be based on open market value.
  • Exception: if value of goods is less than RM500

De Minimis Limit

Exempt input tax can be recovered in full if the total value (directly attributable plus the exempt proportion of any residual input tax) is less than the prescribed amount. The prescribed amount of the De Minimis Limit is the total value of the exempt supplies which does not exceed:

  • An average of RM5,000 per month and
  • Not exceeding 5% of the total value of the total supplies (all taxable and exempt supplies) made in that period

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