Goods and Services Tax (“GST”) is a transactional-based tax applicable on sale and purchase of goods and services. Considering its unique focus on an individual transaction (i.e. sale and purchase), GST-registered construction businesses (“GRCBs”) that have been managing GST risk on a broad level could face a mismatch in expectations and GST compliance level against that of the GST authorities.


Active GRCBs generate over S$100m of sales in a financial year. With numerous cases where non-operating transactions of such GRCBs are incorrectly classified, the substantial amount of lost revenue has triggered an increasing number of audits by IRAS.

 

GST pain points

In line with the majority of GRCBs’ intentions to maximise cash flow (i.e. one way is to minimise GST exposure and potential penalties for incorrect classifications) and ensure smooth business operations with minimal disruptions (e.g. avoid handling an unplanned IRAS GST audit), targeted GST risk management in the following areas are recommended for GRCBs: 

  • Working with HR department to determine the nature of payroll deductions made (e.g. transport, meals, dormitory, staff pass, co-share of insurance/medical benefits) as GRCBs may need to consider them as taxable supplies;
  • Ensuring timeliness of reporting progressive and back-charge billings as well as consider the amount to be raised (e.g. gross instead of net amount);
  • Building of worker's dormitory on project site and classifying cost recharged as fully taxable when it should be partial (e.g. bare rent is GST exempt while furniture & fittings and utilities are taxable);
  • Recovering salary cost without GST when supplying manpower to related/third parties;
  • Excluding business assets put to private use (e.g. GRCB's delivery vehicle driven home at night and over the weekend) from GST reporting;                 
  • Reporting interest earned on loans to related and non-related party as a non-exempt supply;
  • Not tracking share capital movement for GST reporting purposes; and             
  • Reversing GST claims made on expenses should the GRCB’s accounts payable aging records indicate payment to the specific supplier has been outstanding for more than 12 months

Your GST compliance partner

By tapping into our in-house GST Analytics expertise, the GST Assisted Self-help Kit (“ASK”) and GST Assisted Compliance Assurance Programme (“ACAP”) initiatives, we assess GRCBs’ GST compliance frameworks and shed light on gaps that may lead to penalties. We help businesses take advantage of the Voluntary Disclosure Programme (VDP), allowing them to disclose incorrect classifications confidently with lower or no penalties. Our team of GST specialists also offers advisory and compliance support to minimise GST risks.

Contact our team of GST professionals:

Richard Ong, Partner
Accredited Tax Advisor (GST)
T +65 6594 7821 
richardong@RSMSingapore.sg

Huang Yanlin, Senior Manager
Accredited Tax Advisor (GST)
T +65 6715 1140
huangyanlin@RSMSingapore.sg

Lee Meow Ling, Senior Manager
Accredited Tax Practitioner (GST)
T +65 6715 1142
leemeowling@RSMSingapore.sg

Victor Poon, Manager
Accredited Tax Advisor (GST)
T +65 6715 1141 
victorpoon@RSMSingapore.sg


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WE SPECIALISE IN SERVING REAL ESTATE & CONSTRUCTION BUSINESSES

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Learn more about our Real Estate & Construction industry unit!

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