Gift / Deemed Supply

Gift / Deemed Supply

Introduction

This guide will teach you to enter the gift and deemed supply in SQL Financial Accounting.

Gift

Gift Rules

Goods worth not more than RM500 given FREE to the same person in the same year.

• not a supply
• not subject to GST
• input tax is claimable

Example 1:

Company XY Sdn Bhd purchased 15 hampers worth RM200/hamper to be given to each of his employees.

• every employee will get one hamper FOC.
• no need to account for output tax.
• input tax on 15 hampers = RM180.00 (6% x RM3,000.00) is claimable.

Example 2:

Company CX Sdn Bhd has purchased a watch worth RM400.00 and gave it to one of the director’s son.

• The gift is not subject to GST because its value is less than RM500.00 (gift rule).
• input tax incurred on the purchase is claimable.

Example 3:

A Company purchased a laptop worth RM1,500.00 and gave the laptop to a director’s son as a gift.

• GST on the laptop must be accounted for by the company as output tax.
• the value of the goods is more than RM500.00.

Example 4:

A company purchased a laptop worth RM1,500.00 three years ago. Currently the company has given the laptop to one of his business partners. For the purpose of accounting GST, the company has to use open market value of the goods now where the value of the goods is RM450.00, i.e. the value of the goods has depreciated.

• no need to account for output tax on the gift
• the value of the goods is less than RM500.00. (Gift rule applicable)

Example 5:

Company C rewarded RM5,000.00 to his best employee of the year.

• not subject to GST
• money is neither goods nor services

Gift Entry

[GST | GST / Deemed Supply...]

1. Click on NEW.

2. Select type : Gift.

3. Select Code : Customer Code.

Note: 
You will see this note "Entitle Yearly Exempt RM500.00" at the bottom. 

4. Select Item Code: Item Code.

For example,

Item Code	Description	Qty	UOM	U/Cost	Sub Total	Tax	Tax Rate	Tax Amount	SubTotal (Tax)	Expenses GL Account
ANT	ANTENA	1.00	UNIT	350.00	350.00	DS	6%	0.00	350.00	999-999 GST Gift/Deemed Supply (User has to create a GL Account in Maintain Account)

Oversea Supplier Invoice

[Purchase | Purchase Invoice...]

1. Create the oversea supplier invoice at Purchase Invoice.

2. Select the tax code “IM-0”. Tax amount = 0.00

Received Forwarder Notification from K1 /Invoice

Let's said in the K1 form details:-

Description	Amount (MYR)	Calculation
Goods Value (A)	1,155.00	USD300 x 3.8500
Custom Duty (B) (assumed is 5%)	57.75	Rm1,155 x 5%
Total Taxable Amount (C)	1,212.75	A + B
GST - IM	72.77	C x 6% = Rm1,212.75 x 6%

Usually, the forwarder will invoice to the principal company for the following details:-

Description	Net (MYR)	GST	Gross (MYR)
Est. Duties (Import&/Excise Duty)	57.75
Est. GST Import (RM1,212.75 x 6%)	72.77
Est Duties + GST Import	130.52		130.52
Duty Processing Fee	100.00	6.00	106.00
Total Payable			236.52

NOTE : 

GST Import can be calculated in different way. It might based on total weight (ie. weight x container) or total meter square (ie,meter square x container). 
For example,
GST Import = 30,000m2 x 10 containers x 6% = RM18,000.00

Deemed Supply

[GST | GST / Deemed Supply...]

You can found the following tax code available in SQL Financial Accounting.

Tax Code	Description	Tax Rate %
IM-0	Import of goods with no GST incurred (for Foreign Supplier Account)	0%
IM	Import of goods with GST incurred	6%

Oversea Supplier Invoice

[Purchase | Purchase Invoice...]

1. Create the oversea supplier invoice at Purchase Invoice.

2. Select the tax code “IM-0”. Tax amount = 0.00

Received Forwarder Notification from K1 /Invoice

Let's said in the K1 form details:-

Description	Amount (MYR)	Calculation
Goods Value (A)	1,155.00	USD300 x 3.8500
Custom Duty (B) (assumed is 5%)	57.75	Rm1,155 x 5%
Total Taxable Amount (C)	1,212.75	A + B
GST - IM	72.77	C x 6% = Rm1,212.75 x 6%

Usually, the forwarder will invoice to the principal company for the following details:-

Description	Net (MYR)	GST	Gross (MYR)
Est. Duties (Import&/Excise Duty)	57.75
Est. GST Import (RM1,212.75 x 6%)	72.77
Est Duties + GST Import	130.52		130.52
Duty Processing Fee	100.00	6.00	106.00
Total Payable			236.52

NOTE : 

GST Import can be calculated in different way. It might based on total weight (ie. weight x container) or total meter square (ie,meter square x container). 
For example,
GST Import = 30,000m2 x 10 containers x 6% = RM18,000.00

Forwarder Invoice Entry (Purchase Invoice)

[ Purchase | Purchase Invoice...]

1. Select the forwarder supplier code in Purchase Invoice.

2. Insert the following fields:-

• Import Curr.Code (for display only)
• Import Curr Rate (for display only)
• Import Purchase Amt (GST Import input)
• Tax Amount
• Local Tax Amount
  

3. Click on the side button under Import Purchase Amt column. See screenshot below.

4. You have to input the info according to 2.3. Received Forwarder Notification from K1 /Invoice example.

Field Name	Input Value	Explanation
Currency Code	USD	Currency to the goods purchased
Currency Rate	3.85	Follow K1 exchange rate
Purchase Amount	300.00	Goods foreign value as stated in K1 form
Custom Local Amount	1,212.50	Follow K1 total taxable amount. Formula = Purchase Amount + Custom Duty
Tax	IM	6%
Tax Amount	72.77	1,212.75 x 6%
Permit No	K1-3232323	Key-in the K1 no.

5. After press OK to exit the GST Import screen, the purchase invoice item description will be updated as “Purchase Value USD 300.00@3.8500 = RM 1,155.00, Permit No: K1-32323232” from the GST Import entered.

6. Below is the sample of Forwarder invoice entry.

Highlight Changes

Date	Initiated by	Remarks
28 March 2015	Loo	Initial document.
22 April 2015	Loo	Update K1 and new screenshot
24 June 2015	Loo	For forwarder invoice, tax code IM should refer to Local Tax Amount instead of Tax Amount.

See also

• GST Treatment: How to report GST-03 item 16 Capital Goods Acquired for Purchase of machinery from Oversea
• Input Entry For ATS