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GST checklist for businesses

If your business is required to register for GST, what do you need to do to get ready by 1st April 2015?

  1. Taxable supplies - review your inventory and/or services.
    Which of the services that you offer and/or goods that you sell are considered taxable supplies? Are any exempt? If yes, exclude them from the calculation below.
  2. Ascertain if you are required to register for GST
    If your sales of taxable goods or services is currently RM500.000.00 or more, your business is required to register. Sales or turnover for this purpose is ascertained in one of 2 ways:
    • Historical method.
      Takes into account sales for the current month as well as sales for the previous eleven months.
    • Future method
      Takes into account sales for the current month and projected sales over the next eleven months.
    Registrations open in October 2014 and if your sales fall within the mandatory registration category, you will have to register your business by 31st December 2014.
    Note that the threshold criteria is on turnover, and not based on whether your business makes a profit or loss. Even if your businesses is making losses and your turnover is RM500,000.00 or more, you will have to register for GST.
  3. Review your pricing strategies
    • Should you charge GST to your customers on the items that you sell or services that you provide? Would your pricing still be competitive?
    • Should you absorb the GST instead to remain competitive?
  4. Review your purchases and suppliers.
    Will your suppliers be charging you GST on the purchases you make? If yes, this either becomes a cost to your business if you are not registered or if you are, these will be a credit which you can either offset against GST that you collect or request a refund from Jabatan Kastam.
    If you are not registered, depending on whether you are currently paying a Sales or Service Tax, your purchases could become more expensive.
    Due to the timing differences of accounting for GST charged (Output tax) and GST incurred (Input tax), it is critical to your cash flow to ensure that your suppliers invoice you on a timely basis. If they delay, then you would find yourself paying GST charged and not being able to offset it against Input tax which could adversely impact cash flow.
    Note that you can only claim credit for input tax when you actually receive the invoice from your supplier but have to account for and pay GST at the point where you deliver the goods or service to your customer even if you have not invoiced them yet.
  5. Review your employment policies.
    Are your staff entitled to allowances, incentives, benefits in kind, etc? How will these impact your business when GST is implemented? Some examples:
    • You will need to account for and pay GST on gifts to your employees exceeds RM500.00.
    • Mileage claims or fixed travelling allowances?
    • If you give a used and/or obsolete computer to your staff, GST is accountable at open market value.
    • GST on passenger cars cannot be claimed.
  6. Transitional period
    • Sales tax and Service Tax
      Do you currently collect and pay sales and/or service tax? If yes, there is a transitionary period when you have to account and pay sales, service tax as well as start accounting for GST.
    • You need to ensure that invoices issued from 1st April 2015 reflect GST. Invoices issued prior to this should not include GST.
    • If you are a retailer, price tags on your goods need to be GST inclusive from 1st April 2015.
  7. Review your business processes and systems.
    Can your existing business processes and systems not only handle but also cope with the added administrative tasks that will come with the implementation of GST?
    • Invoices must have the words “Tax Invoice” and your GST registration number on them
    • Sales Invoices must be issued to customers not later than 28 days from date of delivery of goods or provision of services.
    • Can you update your prices on a timely basis? Before 1st April 2015, selling prices do not account for GST. On 1st April 2015, prices must account for GST.
    • Does your present accounting system allow for calculation and recording of GST on sales, purchases, expenses and receipts? If yes, do you need to manually specify that GST is incurred before the system picks it up or can you define GST to be calculated and recorded automatically on items or services that you know are subject to GST?
    • Credit control.
      If you provide credit terms to your customers, credit control is even more critical as your business is actually paying GST in advance on your customers’ behalf.
    • Quarterly submission of GST returns with payment if Output tax is more than Input tax.
    • If Jabatan Kastam requests details or performs an audit, can you provide them the necessary reports on a timely basis? GST has to be accounted for on each item that you invoice your customers and/or that you purchase from your suppliers.
    • Maintain financial records and documents for a period of 7 years.
  8. This list is by no means exhaustive or comprehensive, because the implications of GST differs from industry to industry, from business to business. However, this will serve as a starting point to getting your business ready for GST.

    As you would probably realise, getting your business ready for GST should not be left until the last minute as there is quite a bit to be done to ensure compliance. The sooner you put things in place, the easier it will be administratively come 1st April 2015.

    Free consultation - MYOB GST

    Need help?

    Call us for a free consultation and evaluation. At Deltatech, we have done most of the groundwork for you, and will be pleased to evaluate your requirements and advise you on the next steps, including the setting up of a solution.

    Alternatively, attend one of our free previews to get an idea of how to handle GST.

    Click here to contact us via email and request a free consultation.


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