A newly GST registered business may avail itself to claiming GST incurred on purchases of goods and services before the date of its GST registration. Such claims are referred to as "pre-registration GST".
To ease compliance, the IRAS will allow the pre-registration GST in full on the following goods and services that are acquired within six months before the GST registration date of the business:
a) Goods held by the business at the point of GST registration; and
b) Property rental, utilities and services, which are not directly attributable to any supply made by the business before GST registration.
With this, businesses no longer have to apportion the above pre-registration GST even if they have been used to make supplies straddling GST registration or the goods have been partially consumed before GST registration, provided the use of these goods and services after GST registration is for the making of taxable supplies and not exempt supplies.
Existing pre-registration GST rules will still apply for other purchases of goods and services prior to GST registration, including those acquired more than six months before the GST registration date of the business.
This change will take effect for businesses that are GST-registered from 1 Jul 2015.
GSTax's observations:
- Newly registered businesses with ACRA may wish to consider registering for GST within 6 months to avail itself to the above concession and to simplify its pre-registration GST claims. (If the business is registered for GST after 6 months, the pre-registration rules will be more complicated.)
- For others, the rules have made it easier to claim such pre-registration GST, but the rules for goods and services incurred more than 6 months before the date of GST registration are still complicated and difficult to apply for the layman. Hence, businesses may still need the assistance of GST advisors on such claims.
IRAS will release further details of the change by Jun 2015.
Source: IRAS, February 2015