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> GST, Need to pay?

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samkps
post Dec 17 2014, 10:42 AM

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QUOTE(puchongite @ Dec 17 2014, 10:16 AM)
Commercial property chances of hitting >500k should be common.

So what will happen to a non-registrant individual seller selling a >500k commercial property ? Who will collect the GST ? The S&P lawyer ?
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Yeah, grey area and I am not sure, perhaps gst taikor can clarify.

Buyer purchase a shoplot, soho, sofo, sovo from individual, price is more than RM 500k, gst imposable? If yes, who should collect and pay the gomen?

How about is less than 500k (common for shoplot outside KV), gst applied as well? hmm.gif hmm.gif hmm.gif
puchongite
post Dec 17 2014, 10:57 AM

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QUOTE(samkps @ Dec 17 2014, 10:42 AM)
Yeah, grey area and I am not sure, perhaps gst taikor can clarify.

Buyer purchase a shoplot, soho, sofo, sovo from individual, price is more than RM 500k, gst imposable? If yes, who should collect and pay the gomen?

How about is less than 500k (common for shoplot outside KV), gst applied as well?  hmm.gif  hmm.gif  hmm.gif
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Too lazy to dig the malaysian custom document but this is what I read from the net, regarding Canadian gst treatment of non-registrant selling commercial property :-

Non-registrant sells commercial property

QUOTE
Tax tip: When a non-registrant sells real property and the deal is subject to tax, the vendor can often recover GST/HST previously paid on the acquisition or improvement of the property that has not already been recovered. The eligible amount is claimed by filing a rebate form. If the vendor collects tax on the sale, the result is that the vendor sends the CRA the net amount of the tax collected minus the rebate amount. If the vendor doesn’t collect tax on the sale (because the purchaser is registered), the rebate will be paid to the vendor directly by the CRA. The rebate application must be filed within two years of the date of sale.
My understanding is this :-

1. When a non-registrant sells a commercial property, he can recover the gst he paid earlier using a rebate form.
2. Assuming he sells to another non-registrant, then he will collect gst ( or may the lawyer ? ) and he will remit the amount minus the gst he paid earlier.
3. If he sells to a registrant, he collects zero GST from buyer. Then he recover the gst he paid earlier directly from custom.
peri peri
post Dec 17 2014, 11:06 AM

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SOHO nowaday is not under commercial anymore.

There are more grey area in residential such as condo which car park sold separately. These car parks are taxable.

Hence, when comes do sub sale. Lawyer have to do all the justification, collection and refund in between seller and buyer, very transparent process.
Palmwalker001
post Dec 17 2014, 12:00 PM

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QUOTE(puchongite @ Dec 17 2014, 10:57 AM)
Too lazy to dig the malaysian custom document but this is what I read from the net, regarding Canadian gst treatment of non-registrant selling commercial property :-

Non-registrant sells commercial property
My understanding is this :-

1. When a non-registrant sells a commercial property, he can recover the gst he paid earlier using a rebate form.
2. Assuming he sells to another non-registrant, then he will collect gst ( or may the lawyer ? ) and he will remit the amount minus the gst he paid earlier.
3. If he sells to a registrant, he collects zero GST from buyer. Then he recover the gst he paid earlier directly from custom.
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However not the case for Malaysia, non registrant get nothing, acquisition & disposal of capital assets does not form part of the threshold of RM500K.
samkps
post Dec 17 2014, 12:10 PM

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Page 2, Item 7:

"The supply of land used for agricultural, residential (including residential house such as link house, semi-detached house, detached house, apartment including serviced apartment and condominium) or general purpose such as burial, playground and religious is exempt from GST.

The supply of land and building used for commercial, administrative and industrial purpose such as shop lots, office, retail business , small office home office (SoHo), small office virtual office (SoVo), small office flexible office (SoFo), factories, hotel, motel, inn, hostel and warehouses is subject to GST."

http://gst.customs.gov.my/en/rg/SiteAssets...mended%20_1.pdf

The debate now is relying on GST should based on title or purpose of use.

This post has been edited by samkps: Dec 17 2014, 12:16 PM
peri peri
post Dec 17 2014, 12:14 PM

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QUOTE(samkps @ Dec 17 2014, 12:10 PM)
Page 2,  Item 7:

"The supply of land used for agricultural, residential (including residential house such as link house, semi-detached house, detached house, apartment including serviced apartment and condominium) or general purpose such as burial, playground and religious is exempt from GST.

The supply of land and building used for commercial, administrative and industrial purpose such as shop lots, office, retail business , small office home office (SoHo), small office virtual office (SoVo), small office flexible office (SoFo), factories, hotel, motel, inn, hostel and warehouses is subject to GST."

http://www.mia.org.my/new/downloads/circul...y%202014%29.pdf

The debate now is relying on GST should based on title or purpose of use.
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its also can based on type of loan you are taking as confirmed by banks.

Says SOHO with residential loan, GST zero rated.
Palmwalker001
post Dec 17 2014, 12:16 PM

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QUOTE(peri peri @ Dec 17 2014, 12:14 PM)
its also can based on type of loan you are taking as confirmed by banks.

Says SOHO with residential loan, GST zero rated.
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SOHO with residential purpose qualify for EPF but still subject to EPF

(Edited version)

This post has been edited by Palmwalker001: Dec 17 2014, 01:52 PM
samkps
post Dec 17 2014, 12:23 PM

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QUOTE(Palmwalker001 @ Dec 17 2014, 12:16 PM)
SOHO is exempted not zero-rated.
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There are still huge debate whether GST should be implemented against title or type of use.

http://www.thestar.com.my/Business/Busines...come/?style=biz

Currently, developer can take a "claim" the SOHO as for "residential usage" and is exempt from GST. If one day gomen want to do it according to title, then may have problem already...

This post has been edited by samkps: Dec 17 2014, 12:28 PM
Palmwalker001
post Dec 17 2014, 12:40 PM

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QUOTE(samkps @ Dec 17 2014, 12:23 PM)
There are still huge debate whether GST should be implemented against title or type of use. 

http://www.thestar.com.my/Business/Busines...come/?style=biz

Currently, developer can take a "claim" the SOHO as for "residential usage" and is exempt from GST. If one day gomen want to do it according to title, then may have problem already...
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Found some GST stuff on Custom for Property Developer, quite lengthy try to summarise it for our pleasure reading

As we deal with property developer, this is best we know how GST impact on them


Q: What are the supplies subject to GST in the real estate industry?

A: The supplies which are subjected to GST include the supply of all types of land except land for residential, general use or agricultural land whether or not including housing / building (Land includes building).

Example 1:
DEF Developer Sdn Bhd carries out a mixed development project incorporating 200 units of residential houses, 20 units of commercial building and 10 units of industrial building. The sale of the 20 commercial and 10 industrial units are subject to GST. The sale of the 100 residential houses is exempt from GST.

The classification of type of building is determined by the condition of use as stated or to be stated in the document of title.

https://forum.lowyat.net/topic/3378525?hl=palmwalker001
samkps
post Dec 17 2014, 12:43 PM

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QUOTE(Palmwalker001 @ Dec 17 2014, 12:40 PM)
Found some GST stuff on Custom for Property Developer, quite lengthy try to summarise it for our pleasure reading

As we deal with property developer, this is best we know how GST impact on them
Q: What are the supplies subject to GST in the real estate industry?

A: The supplies which are subjected to GST include the supply of all types of land except land for residential, general use or agricultural land whether or not including housing / building (Land includes building).

Example 1:
DEF Developer Sdn Bhd carries out a mixed development project incorporating 200 units of residential houses, 20 units of commercial building and 10 units of industrial building. The sale of the 20 commercial and 10 industrial units are subject to GST. The sale of the 100 residential houses is exempt from GST.

The classification of type of building is determined by the condition of use as stated or to be stated in the document of title.

https://forum.lowyat.net/topic/3378525?hl=palmwalker001
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Key point here: "The classification of type of building is determined by the condition of use as stated or to be stated in the document of title.

Problem now - SOHO, SOVO, SOFO should follow title or condition of use? Office or home? brows.gif brows.gif



This post has been edited by samkps: Dec 17 2014, 12:47 PM
cherroy
post Dec 17 2014, 12:51 PM

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QUOTE(peri peri @ Dec 17 2014, 12:14 PM)
its also can based on type of loan you are taking as confirmed by banks.

Says SOHO with residential loan, GST zero rated.
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GST has nothing to do with what kind of loan given by banks.

It is about the property title as set by the Custom.
If Custom said commercial properties is subjected to GST, then those property under commercial title will be subjected to GST, as simple as that. Nothing to do with banks.

How can Banks can overwrite Custom ruling. laugh.gif
Tsuto
post Dec 17 2014, 12:54 PM

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So is property covered under hda but under commercial title subject to gst?
Jasoncat
post Dec 17 2014, 12:58 PM

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Tax is always a complicated subject matter even for lawyer or accountant. To a non professional layman in this area (like me), I'm always confused (sometimes even after getting the doubts cleared) rclxub.gif
samkps
post Dec 17 2014, 01:00 PM

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QUOTE(Tsuto @ Dec 17 2014, 12:54 PM)
So is property covered under hda but under commercial title subject to gst?
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Grey area.. Title vs Purpose of use

Perhaps someone can open a thread and vote entitle "Gst should be imposed against title or purpose of use"....
marcus_bread
post Dec 17 2014, 01:14 PM

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is ur SnP spell out the price is inclusive or exclusive of GST? or it is silent on the GST? if it is silent on GST then the developer has no right to charge GST and they need to absorb themselve
Palmwalker001
post Dec 17 2014, 01:48 PM

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QUOTE(samkps @ Dec 17 2014, 12:43 PM)
Key point here: "The classification of type of building is determined by the condition of use as stated or to be stated in the document of title.

Problem now - SOHO, SOVO, SOFO should follow title or condition of use? Office or home?  brows.gif  brows.gif
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I think my previous statement say SOHO is exempted is wrong.

The supply of land and building used for commercial, administrative and industrial purpose such as shop lots, office, retail business, small office home office (SoHo), small office virtual office (SoVo), small office flexible office (SoFo), factories, hotel, motel, inn, hostel and warehouses is subject to GST.

The classification of land and building is based on the usage at the condition as below:–
(a) The actual use of the property, design features and the essential characteristic and attributes of the property.

(b) In the case of newly completed property which has not been used, the sale of the property will be based on the design features and the essential characteristic and attributes of the property.

© Vacant / bare land to be treated based on usage according to the title.

(d) Change in use of the property such as change in used of residential house to be converted to commercial premise is subject to standard rate based on the following:
(i) The premise is registered with the relevant authorities;
(ii) The owner himself applies for change of use; or
(iii) Evidenced by the sales and purchase agreement

puchongite
post Dec 17 2014, 01:51 PM

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QUOTE(samkps @ Dec 17 2014, 01:00 PM)
Grey area.. Title vs Purpose of use

Perhaps someone can open a thread and vote entitle "Gst should be imposed against title or purpose of use"....
*
As far as what I read is that, the Malaysian custom takes into consideration of "the intended use".

For example, service residence for long term tenancy is not subjected to GST, while service residence for short term tenancy ( eg holiday use, hotel suite etc ) are subjected to GST.

In my humble opinion, their document covered service residence pretty well.

And they also said SOHO, SOXO are subjected to GST, based on what you quoted earlier.

But the term SOHO is becoming vague these days, some SOHO is covered under HDA, so the intended use is residential for sure. But some SOHO are not under HDA.

Some gurus here hold to the view that all SOHO is not subjected to GST. But I am not sure on what basis they said that ...

This post has been edited by puchongite: Dec 17 2014, 02:13 PM
cherroy
post Dec 17 2014, 02:08 PM

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QUOTE(marcus_bread @ Dec 17 2014, 01:14 PM)
is ur SnP spell out the price is inclusive or exclusive of GST? or it is silent on the GST? if it is silent on GST then the developer has no right to charge GST and they need to absorb themselve
*
Should be exclusive as tax invoice need to issued with GST.
Tax invoice standard -> selling price + GST charged.
puchongite
post Dec 17 2014, 02:28 PM

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QUOTE(cherroy @ Dec 17 2014, 02:08 PM)
Should be exclusive as tax invoice need to issued with GST.
Tax invoice standard ->  selling price + GST charged.
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That's for post-GST.

If I am not mistaken, there is somewhere a mention that failure to include gst in a contract signed before gst implementation could result in the developer having to absorb it after gst implementation.

This post has been edited by puchongite: Dec 17 2014, 02:29 PM
Jasoncat
post Dec 17 2014, 02:42 PM

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QUOTE(Palmwalker001 @ Dec 17 2014, 01:48 PM)
I think my previous statement say SOHO is exempted is wrong.

The supply of land and building used for commercial, administrative and industrial purpose such as shop lots, office, retail business, small office home office (SoHo), small office virtual office (SoVo), small office flexible office (SoFo), factories, hotel, motel, inn, hostel and warehouses is subject to GST.

The classification of land and building is based on the usage at the condition as below:–
(a) The actual use of the property, design features and the essential characteristic and attributes of the property.

(b) In the case of newly completed property which has not been used, the sale of the property will be based on the design features and the essential characteristic and attributes of the property.

© Vacant / bare land to be treated based on usage according to the title.

(d) Change in use of the property such as change in used of residential house to be converted to commercial premise is subject to standard rate based on the following:
(i) The premise is registered with the relevant authorities;
(ii) The owner himself applies for change of use; or
(iii) Evidenced by the sales and purchase agreement
*
That's where the confusion lies for SOHO

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