Subject Heading - Tax Academy · Subject Heading • Introduction ... • The ASK Package •...

Subject HeadingSubject Heading

GST Risks ManagementStarts With ASK

Subject Heading

• Introduction

• Benefits of ASK

• The ASK Package

• Conclusion

Outline

2

Subject Heading

Introduction to ASK

3

Subject Heading

• Assisted Self-help Kit (ASK) is a self-assessmentpackage

• Designed specially by IRAS

• To facilitate voluntary compliance of GST-registered businesses

• To manage GST risks in an effective manner

What does ASK stand for?

4

Subject HeadingHow to use ASK?

55

GOOD GST COMPLIANCE

GST

Practices

Pre-Filing

Checklist

ASK

Annual

Review

Section 1 Section 2 Section 3

Putting in place the requirements

Getting it Right before the Return

Submission

Ensuring Accuracy of Return

GST

Practices

Pre-Filing

Checklist

ASK

Annual

Review

Subject Heading

• May be adopted on a voluntary basis, by all GST-registered businesses regardless of turnover

• But conducting ASK is compulsory if you are applying for any of the following GST schemes

• Import GST Deferment Scheme (IGDS)

• Approved Marine Customer Scheme (AMCS)

• Approved Contract Manufacturer and Trader (ACMT) Scheme

• Approved Refiner and Consolidator Scheme (ARCS)

• Major Exporter Scheme (MES); or

• Approved Import GST Suspension Scheme (AISS)

When do we use the ASK?

6

Subject Heading

• In-house GST personnel or accounting staff; or

• External tax advisory firms; or

• An individual accredited with the Singapore Instituteof Accredited Tax Professionals (SIATP) as anAccredited Tax Advisor (GST) [ ATA (GST) ] orAccredited Tax Practitioner (GST) [ ATP (GST) ]

Who can perform the ASK annual review?

7

Subject HeadingHow does ASK benefit you?

8

Understand GST requirements on filing and record-

keeping

Review and ensure accuracy of GST

submissions

Reduce risks of incurring penalties

on errors made

Discover past GST errors early for timely disclosure to IRAS, and enjoy zero or reduced

penalties under IRAS’ Voluntary Disclosure Programme (“VDP”)

Qualify for specific GST schemes

Subject Heading

• WXY Pte Ltd.'s last GST return for financial year ended 31 Dec 2015 is for the quarterly accounting period ended 31 Dec 2015

• Statutory filing date for this last GST return is 31 Jan 2016

• ‘Grace period’ to qualify for VDP is 31 Jan 2017

More on IRAS’ VDP...

9

ASK Annual Review

1 Jan 2015 31 Dec 2015

31 Jan 2017 (last day of VDP

grace period)

31 Jan 2016 (statutory filing date of GST return for period ended 31 Dec 2015)

E.g. If WXY discloses the

errors found in ASK Annual

Review to IRAS on 30 Jun

2016, penalty will be

waived on the errors made

for year 2015.

Reduced penalty

of flat 5% under

VDP on errors

made before

1 Jan 2015

30 Jun 2016 31 Jan 2017

Subject Heading

The ASK package

10

Subject HeadingASK Package

11

GOOD GST COMPLIANCE

GST

Practices

Pre-Filing

Checklist

ASK

Annual

Review


Subject HeadingWhere do we find this on IRAS website?

12

Subject HeadingSection 1: GST Practices

13

GST COMPLIANCE

PeopleRecord-keeping

SystemInternal Controls


14


15

Essential Requirement:

Keep all accounting records and supporting documents for a statutory period

Good Practices:

a) Document record-keeping processes for future handover

b) Keep electronic records instead of hardcopies for easy storage and retrieval

ILLUSTRATIONRECORD-KEEPING:

Keep Complete Records


16

Use the template worksheets (or a comparable equivalent) to maintain internal records of all your GST related transactions, e.g.

ILLUSTRATIONRECORD-KEEPING:

Keep GST worksheets

Standard-Rated Supplies ListingName of Business: ABC Pte Ltd

GST Registration No: 1234567A

GST Reporting Period: 1/4/2016 to 30/6/2016Invoice

DateInvoice Number

Name of Customer Description of Sales Invoice amount excluding GST

(S$)

GST per invoice (S$)

14-Apr-16 12346 Mango Pte Ltd Sale of mobile phones – Local 27,000.00 1,890.00

Apr-16 27,000.00 1,890.00

8-May-16 12347 Longan (S) Pte Ltd Sale of machinery – Local 42,500.00 2,975.00

May-16 42,500.00 2,975.00

13-Jun-16 12350 Lychee Pte Ltd Sale of mobile phones – Local 35,000.00 2,450.00

15-Jun-16 12351 Rambutan Ltd Sale of mobile phones – Local 15,500.00 1,085.00

16-Jun-16 12354 Durian Pte Ltd Sale of mobile phones – Local 7,500.00 525.00

23-Jun-16 12355 Mango Pte Ltd Sale of mobile phones – Local 19,500.00 1,365.00

30-Jun-16 12356 ZZZ Pte LtdSale of commercial property located in Singapore 450,000.00 -

Jun-16 527,500.00 5,425.00

Total 597,000.00 10,290.00

Box 1 Box 6

GST > GST-registered businesses > Learning the basics > How to implement GST > Invoicing, Price Display and Record Keeping >


17

Essential Requirement:

Accounting system to record sales and purchases

Good Practices:

Computerised accounting system with auto-checks (duplicates, variances etc.)

ILLUSTRATIONSYSTEM:

Accounting System


18


19

Subject HeadingSection 2 : Pre-Filing Checklist

20

GOOD GST COMPLIANCE

GST

PracticesPre-Filing

Checklist

ASK

Annual

Review


Subject Heading

• Quality check on your GST declarations before filingGST returns

• Series of questions and answers, based on the keyprocesses in GST declarations

Section 2 : Pre-Filing Checklist

21

Subject Heading

• There are six pre-filing checklists covering:• Standard-rated Supplies and Output Tax

• Zero-rated Supplies

• Exempt Supplies

• Taxable Purchases and Input Tax & Refunds claimed

• Goods imported under MES and Other ApprovedSchemes

• Goods imported under IGDS scheme

Section 2 : Pre-Filing Checklist

22


23


24

ILLUSTRATIONPRE-FILING CHECKLIST :

Zero-Rated Supplies

Yes

No

Step 1 : Run through the questions provided in each checklist

Step 2 : Select a response

Step 3 : Check if you have adopted the correct GST treatment / maintain the requisite documents/ adopt the correct procedure


25

Subject HeadingSection 3 : ASK Annual Review

26

GOOD GST COMPLIANCE

GST Practices

Pre-Filing Checklist

ASK Annual Review



27

• Conduct review on your GST returns filed in each financial year

STEP 1: Review your GST Declarations for the Past Financial Year

STEP 2: Select GST Return(s) for Review

STEP 3: Perform Checks for the Selected GST Return(s)

STEP 4: Review and Compare your Financial Statements against the GST Declarations for the Same Financial Year

STEP 5: Quantify your Errors (if any) and Submit the Findings to IRAS

Review listing

Select samples

from listing

Check supporting documents

To conduct prescribed checks on selected transactions to ensure correct GST treatment

To select 3-month period with highest Total Supplies & Taxable Purchases for further substantive testing

Holistic review and conduct simple checks

Checks to ensure GST returns declarations tie in with financial statements and any discrepancies are accounted for


28

• Step 1: Review your GST Declarations for the Past Financial Year

Check for: Action:

1 Major fluctuations in your supplies and

purchases

Assess if the fluctuation is in line with

your business cycle or due to

significant change to your business

2 “Declared output tax” less “Computed

output tax” > - $10,000

Explain and reconcile the difference.

3 “Declared input tax” less “computed

input tax” > $10,000

Explain and reconcile the difference.

4 Taxable Purchases over Total

Supplies (i.e. TP/TS) ratio for the year

> 1.2

Evaluate if this trend is reasonable

and explain reasons for the high

TP/TS ratio.


29

• New e-Service to Retrieve GST Returns Data


30

• Step 2: Select GST Return(s) for Review

• Determine which GST return(s)

• Determine number of GST return(s)

Compute Total Supplies (Box 4) + Taxable Purchases (Box 5)

for each GST return

Select and review the GST return(s) with

highest total

Filing frequency

No. of return(s) to select

Which return(s) to select

Quarterly 1 The GST return with highest total

6-monthly 1 The GST return with highest total

Monthly 3 The GST return with highest total AND another 2

consecutive GST returns


31

• Step 3: Perform Checks for the Selected GST Return(s)

• Review your Listing

• Check all your GST listings to ensure:

• Listing totals tally with respective boxes in GST return(s)

• Listings are complete (i.e. all your GST transactions are captured in the listings)

Review your listing

Select samples from your listing

Check your supporting

documents for the samples selected

Review your listing





32


• Select Samples from your Listings

• For each box, follow the Flowchart on Selection of Samples

• Select samples from your GST listing(s) to cover your major business scenarios

Review your listing





33


Yes

No

Yes

No

a. Select a total of 30 samples from your listing

b. Please refer to paragraph 2 of Step 3A to 3E on what your selected samples must cover

Do these 30 samples cover ≥ 30% of the total value in your

listing?

a. Select more samples until the samples cover ≥ 30% of the total value in your listing. Alternatively, select any other 30 more samples to make up the maximum total of 60 samples (40 for Standard-Rated Supplies)

b. Proceed to check your supporting documents for all samples

Proceed to check your supporting documents for these 30 samples

Is the total number of transactions in your listing for the selected return(s) >

30?

Proceed to check your supporting documents for ALL transactions in the listing


34


Value of the 30 samplesDo you need to select more samples?

Your sample size will be:

Equal or more than 30% of the total transactions value

No. 30

Less than 30% of the total transactions value

Yes. E.g. You select another 10 samples and the value of these 40 samples can reach 30% of the total transactions value.

40

Yes.E.g. You select another 30 samples and the value of these 60 samples still cannot reach 30% of the total transactions value.

60(i.e. the maximum number of samples

required)


35


• Check your supporting documents (e.g. tax invoices, credit notes, import permits, export documents, etc.) for samples selected to ensure:

Review your listingSelect samples from

your listing



GST Transaction Check to ensure

Standard-rated Supplies and Output Tax GST is properly charged

Zero-rated Supplies Goods: Export documents are maintainedServices: Supplies qualify for zero-rating

Exempt Supplies Supplies qualify for GST exemption

Input Tax and Refunds Claimed GST is properly claimed

Goods imported under MES / A3PL / IGDS / Other Approved Schemes

GST is properly suspended (e.g. under MES) or deferred (under IGDS) according to conditions of the scheme


36

• Step 3: Perform Checks for the Selected GST Return(s)Name of Business: ABC Pte Ltd

GST Registration Number: 1234567A

GST Reporting Period: 1/4/2016 to 30/6/2016

Invoice Date Invoice Number

Name of Customer

Description of Sales Destination of Export

Invoice Amount

(US$)

Invoice Amount

(S$)

18-Apr-16 12344 XYZ Ltd Sale of mobile phone – Air UK 10,000.00

29-Apr-16 12345 BBB Pty Ltd Sale of mobile phone – Air Australia 8,500.00

30-Apr-16 12348 DEF Inc. Sale of mobile phone – Air USA 1,000.00 1,500.00

Apr-16 1,000.00 20,000.00

2-May-16 CN1001 DEF Inc. Cancellation of sales - inv #12348 USA (1,000.00) (1,500.00)

25-May-16 12349 BBB Pty Ltd Sale of mobile phone - Sea Australia 11,500.00

May-16 (1,000.00) 20,000.00

22-Jun-16 12353 XYZ Ltd Management services UK 20,000.00

30-Jun-16 12358 BBB Pty Ltd Sale of mobile phone - Sea Australia 10,000.00 Jun-16 20,000.00

Total 60,000.00

Box 2

1(a): Listing total tallies withBox 2 in GST return

1(b): Listing is complete. “Missing” invoice number 12346 and 12347 are issued for standard-rated supply and are in the Standard-rated Supply Listing


37


Name of Business: ABC Pte Ltd

GST Registration Number: 1234567A

GST Reporting Period: 1/4/2016 to 30/6/2016

Invoice Date Invoice Number

Name of Customer

Description of Sales Destination of Export

Invoice Amount

(US$)

Invoice Amount

(S$)

18-Apr-16 12344 XYZ Ltd Sale of mobile phone – Air UK 10,000.00

29-Apr-16 12345 BBB Pty Ltd Sale of mobile phone – Air Australia 8,500.00

30-Apr-16 12348 DEF Inc. Sale of mobile phone – Air USA 1,000.00 1,500.00

Apr-16 1,000.00 20,000.00

2-May-16 CN1001 DEF Inc. Cancellation of sales - inv #12348 USA (1,000.00) (1,500.00)

25-May-16 12349 BBB Pty Ltd Sale of mobile phone - Sea Australia 11,500.00

May-16 (1,000.00) 20,000.00

22-Jun-16 12353 XYZ Ltd Management services UK 20,000.00

30-Jun-16 12358 BBB Pty Ltd Sale of mobile phone - Sea Australia 10,000.00 Jun-16 20,000.00

Total 60,000.00

Box 2

Supply of services

Credit note issued

Different customers

Different export scenarios for goods

Different export scenarios for goods


38

• Check your supporting documents for samples selected

• Check the invoices issued

3.1(b): Total sales amountis recorded correctly inthe listing

3.1(a) : No GST amount orGST amount is recordedas zero (‘0’)3.1(c): Determine whether

the supply made is ongoods and/or services.Then, proceed to checkother documents anddetermine if the supply iscorrectly zero-rated


• Check your supporting documents for samples selected

• Check the transport document(s) for export of goods

39

Export via SEA –BILL OF LADING

Export via LAND –EXPORT PERMIT

Export via AIR –AIR WAYBILL

3.2(b)(iii): Contains sufficient information tosupport that the goods exported are identical tothe goods sold

3.2(b)(ii): Goods are to be exported from Singapore to an overseas country

3.2(b)(i): Your business name is shown as the exporter


• Step 3B: Check your Zero-rated Supplies

International transport of passengers and/or goods

Services supplied directly in connection with land and goods outside Singapore

Specific services performed wholly outside Singapore (e.g. exhibition services, etc.)

Services supplied to and directly benefiting a person belonging outside

Singapore

Prescribed services supplied to and directly benefiting an overseas person belonging outside Singapore in his business capacity

Prescribed services comprising international telecommunication transmission

ZER

O-R

ATI

NG

OF

INTE

RN

ATI

ON

AL

SER

VIC

ESInv #12353 (dated 22 Jun 2016) : Management services provided to XYZ

Ltd in UK

Services supplied to and directly benefiting a person belonging

outside Singapore

40


• Step 4: Review and Compare your Financial Statements againstyour GST Declarations for the Same FY

• Compute annual Total Supplies less your Sales* :

Compute the yearly ratio of Total Standard-rated Supplies (Box 1) over Total Supplies (Box 4) of your GST returns

Yes (i.e. ratio is 75% or more ) No (i.e. ratio is < 75%)

Are your annual Total Supplies in GST returns < your Sales in the financial statements? Compute

the difference

No further action is required for GST

‘ASK’ Annual Review purposes

No

Yes

Is your yearly ratio of Total Standard-rated Supplies over Total Supplies > 75%?

Reconcile and provide explanation when the difference is more than $150,000

Reconcile and provide explanation when the difference is more than$500,000

41* Sales may also be referred to as Trading Income, Turnover or Revenue. You should also include other income such as rental, interest and etc.


• Step 4: Review and Compare your Financial Statements against your GST Declarations for the Same FY

• Transactions with related parties and non-trade transactions

• Account back the GST previously claimed on purchases not paid after 12 months

42


• Step 5: Quantify your Errors (if any) and Submit your Findings to IRAS

43

Outcome Action

No error discovered Complete and submit the Declaration Form to IRAS

Error(s) discovered

Non-GST error Quantify and report non-GST amount in error for the selected GST return(s)

Isolated GST error

Quantify and report GST amount in error for the selected GST return(s)

Recurring GST error

Quantify and report GST amount in error for:A) the selected GST return(s) and other affected returns of same FY;B) affected GST return(s) filed in current FY

C) each affected FY for the past 5 years* if the error is discovered in Step 3(An estimation, subject to IRAS’ approval may be allowed if it is difficultto quantify actual amount)

Do not correct your error(s) immediately in GST F7 or in your next GST F5. IRAS will advise youon how to correct the error(s) – if you are under ASK Annual audit review

• Error relating to an accounting period on or after 1 Jan 2007 is to be corrected within 5 years from the end of that accounting period.


44

STEP 1: Review your GST Declarations for the Past Financial Year

STEP 2: Select GST Return(s) for Review

STEP 3: Perform Checks for the Selected GST Return(s)

STEP 4: Review and Compare your Financial Statements against your GST Declarations for the Same Financial Year

STEP 5: Quantify your Errors (if any) and Submit your Findings to IRAS

© 2017 Inland Revenue Authority of Singapore. All rights reserved.

Thank You

The information presented in the slides aims to provide a better general

understanding of taxpayers’ tax obligations and is not intended to

comprehensively address all possible tax issues that may arise. This information

is correct as at 06/06/2017. While every effort has been made to ensure that this

information is consistent with existing law and practice, should there be any

changes, IRAS reserves the right to vary its position accordingly.

45

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