The IRAS has published the sixth edition of GST Guide for property owners and property holding companies on the 8 January 2021.
It has been made clear in this update that if the security deposit (which is not subject to GST if it is refundable) is used to offset any rent payable or payment for goods and services, the amount deducted would be considered to be inclusive of GST.
The e-tax guide also added two new paragraphs to state that the letting of worker’s dormitories is regarded as a provision of bed spaces with furniture and fittings and only the provision of bed space is exempt from GST. In other words, the supply of worker’s dormitories is subject to 7% GST to the extent that it includes the supply of furniture and fittings. There is no longer an excuse to fake ignorance not to charge GST on the supply of worker’s dormitories with furniture and fittings now that the IRAS has stated clearly its position in the e-tax guide
If the rental of the worker’s dormitories is charged on a lump sum basis, the supplier would have to split the rental of bed space and furniture and fittings into exempt and taxable components respectively. The difficulty lies in determining the value of the taxable components of furniture and fittings, should it be $20, $50 or $200?
One of the examples given in the guide on the splitting of value into exempt and taxable component is to take the actual costs incurred to provide the furniture and fittings and impose a reasonable mark-up. This is just one of the examples provided and we are sure that the companies in this industry would have their own way of calculating the component of the taxable value of the rental of furniture and fitting and the example stated in the guide need not be the only way.
Eddie is the co-founder and Tax Director of Jed Tax Consulting Pte Ltd. Jed Tax Consulting is an independent GST consulting firm in Singapore, provides support to clients with all aspects of GST matters (e.g. MES renewal, ASK and ACAP review, IRAS audit queries, tax codes review and set-up, GST advisory, GST return filing and in-house training etc). Jed Tax Consulting is supported by a team of accredited tax practitioners and advisors with vast experience in IRAS and Big 4 accounting firms.
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