Source : The Straits Times, Oct 11, 2007
AFTER reading the letter, 'Why GST on condo sinking fund?' (ST, Oct 8), I found this on the Inland Revenue Authority of Singapore website FAQs:
Q:Should GST be chargeable on condominium sinking fund at the point of collection?
A:Although the sinking fund is utilised at a later time for repairs and upgrading works, the time of supply for GST purposes is triggered when the money is collected. Hence, if the management corporation is registered for GST, it has to collect GST ... at the point of collection.
I disagree that 'the time of supply for GST purposes is triggered when the money is collected' because the sinking fund is a reserve fund, which is not necessarily 'utilised at a later time for repairs and upgrading works'.
For example, in the collective sale of my condominium the unutilised sinking fund amounting to over half a million dollars is being refunded by the purchaser. It has not been utilised in any way and GST paid on contributions should be refunded.
With the rise in the GST rate and collective sales, this question is of wide public interest and I hope the authorities will provide a clear answer.
Kenneth Tan Boon Beng
I, TOO, grappled with the rationale behind the paying of GST on the sinking fund. In addition, I question why GST is chargeable on payments to the management fund.
The management fund is collected from subsidiary proprietors to pay the estate manager, auditors and contractors and GST is payable on such fees. The sinking fund is reserved for future major expenses. In the event that money from the fund is used, GST is payable for the services.
Subsidiary proprietors thus end up paying GST twice: once when the monies are collected by the condo management and a second time when payment is made to service providers.
In the case of the sinking fund, charging GST has this unjust consequence: subsidiary proprietors lose 7 per cent of their money to GST even before they begin to earn interest on amounts kept in time deposits.
Thong Low Meng
Source : The Straits Times, Oct 27, 2007
ReplyDeleteNo Double Payment Of GST By Condo Owners
I REFER to the letters, 'Why GST on condo sinking fund?' (ST, Oct 8) and 'GST on management, sinking funds inequitable' (ST, Oct 11).
The Goods and Services Tax (GST) is chargeable on supply of goods and services, i.e., anything done for a consideration.
GST-registered persons have to charge and account for GST at the earliest happening of one of three events, viz., when the service is provided, or when the payment is received or when the tax invoice is issued.
Take, for example, the payment to a GST-registered person for a year's pest-control services, to be undertaken once a quarter and with extermination services to be performed upon discovery of significant pest problems. GST is charged and payable on the entire payment even though the pest-control service is not to be done immediately and no extermination service may eventually be undertaken.
A management corporation (MC) is a body corporate set up to provide the services of controlling and maintaining the common property and for which it levies a contribution. The services are non-specific and performed continually.
The MC decides on how best to perform the services, be it through regular inspection and maintenance, ad hoc repairs of carparks, lifts and club facilities, etc, one-time major repairs, or extension of facilities such as the building of covered shelters.
The MC collects fees for the whole range of non-specific services. GST has to be charged on the fees collected, regardless of when and how it chooses to perform its services.
There is no double payment of GST by the owners arising from the MC engaging a contractor to perform repair works.The latter is a separate transaction between the MC and the contractor. The GST-registered contractor charges the MC for his services, including GST. The MC disburses the payments for those services, including GST, from its funds, and then claims the GST incurred from the Inland Revenue Authority of Singapore (Iras) as its input tax.
For more information on GST on MC's contribution, please refer to the Iras website.
Yvonne Yim Seon Young (Ms)
Principal Corporate Communications Officer
Inland Revenue Authority of Singapore