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Subsidized Childcare Services & Training Services

27-Feb-2017

GST-registered businesses providing subsidized child care or training services are often unclear on the correct GST treatment to apply as it depends on whom the subsidies are awarded to.


IRAS has provided clearer guidance on the appropriate GST treatment to help child care operators and training providers determine the correct GST treatment to apply on their fees and provide certainty to customers.

 

Subsidy for Childcare Services

Whether GST is chargeable on the full or subsidized child care fees depends on whether the subsidy is awarded to the parent/child or to the GST registered child care operator.


1. Subsidy is awarded to the child care operator

If the subsidy is awarded to the GST registered child care operator so that it can charge a lower fee for its services, GST is chargeable on the subsidized fees (i.e. net child care fees payable after deducting the subsidies).

 

2. Subsidy is awarded to the eligible parent/child

If the subsidy is awarded to the eligible parent/child to help defray the cost of child care fees, the GST registered child care operator should charge and account for GST on the full child care fee before deducting the subsidy, as that is the value of its service. This is notwithstanding that the subsidies may be credited to the child care operator directly.

 

Subsidy/grant for Training Services

Whether GST is charged on the gross or subsidised training fees depends on whether the subsidy/grant is awarded to the eligible customer (i.e. trainee) or the GST registered training provider.

 

1. Subsidy/grant is awarded to the training provider 
If the subsidy/ grant is awarded to the GST registered training provider so that it can charge the course fee at a subsidised rate, GST is chargeable on the subsidised training fees (i.e. net fees payable after deducting the subsidies).

 

2. Subsidy/grant is awarded to the eligible trainee 

If the subsidy/grant is awarded to the trainee to help defray the cost of training fees, the GST registered training provider should charge and account for GST on the gross training fees before deducting the subsidies. This is notwithstanding that the subsidies/grants may be credited to the training provider directly.

 

Source: IRAS

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