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==Partial Exemption Rules== | ==Partial Exemption Rules== | ||
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Revision as of 07:23, 5 August 2016
Introduction
- This guide will explains how Partial Exemption, Apportionment and Annual Adjustment are made in respect of residual input tax which is attributable to both taxable and exempt supplies in SQL Financial Accounting.
Partial Exemption Rules
- Flowchart:
De Minus Rule (DMR)
- To satisfy the De Minus Rule:
- 1. DMR <= 5% and
- 2. Total Exempt Supply (ES) <= Average Rm5,000.00 per month
- Formula:
- DMR = ES / ES + (SR + ZRL + ZRE + DS + OS + RS + GS)
Input Tax Recoverable Ratio (IRR)
- Formula:
- IRR = (T-O1) / (T+E-O2)
- T = SR + ZRL + ZRE + DS + OS + RS + GS
- E = ES
- IRR = (T-O1) / (T+E-O2)
- O = Total Value of excluded the following supplies made in the taxable period.
No. Excluded Supplies O1 O2 1 SR (Disposal of assets) √ √ 2 DS (Self-recipient accounting transactions, ie. any supplies users make to themselves eg. imported services etc.) √ √ 3 OS (Out of scope transactions which are not taxable in Malaysia) √ √ 4 ES43 (Incidental financial supplies) √ 5 ES (Disposal of assets which are exempted eg. residential house) √
Input Tax Claimable Logic to TX-RE, TX-E43 & TX-N43 (Based on DMR)
- Below is the summary of the calculation logic based on DMR to determine the input tax claimable.
Tax Code Tax Rate Fulfill DMR? Input Tax Claimable (ITC) TX-RE 6% Yes ITC x 100% TX-RE 6% No ITC x IRR TX-E43 6% N/A ITC x 100% TX-N43 6% Yes ITC x 100% TX-N43 6% No ITC x 0%
How to exlude the IRR for the capital goods disposal off?
- For example, Mixed Co. Sdn Bhd., whose current tax year ends on 31 December 2016, has in his taxable period of April 2015, made some mixed supplies and at the same time incurred residual input tax as follows.
RM) T Value of all taxable supplies, exclusive of tax 200,000.00 E Value all of exempt supplies 40,000.00 O1 & O2 Value of a capital goods disposal off (exclusive of tax) 50,000.00 O2 Value of incidental exempt supplies 20,000.00 Residual Input Tax Incurred 10,000.00
Steps
- 1. Go to GST | Maintain Tax...
- 2. Edit the SR tax code.
- 3. Click on the tax rate lookup. See the screenshot below.
- 4. Click +' sign follow by IRR Excluded to insert additional tax rate 6% IRR excluded (O).
Note: 1. Tax Rate set as EA or E6%. 2. E = Exclude from IRR formula.
- 5. Enter the disposal of asset in Customer Invoice.
- 6. Select tax code SR.
- 7. Select tax rate E6% to exclude from IRR calculation (It means "O" to the formula).
- 8. You will found the IRR calculated (88.24%) and the GST-Listing breakdown by tax code as shown in the screenshot below.
- IRR calculation:
Calculation RM t Value of all taxable supplies, exclusive of tax 100,000 (SR) + 50,000 (ZRL) + 50,000 (OS) 200,000 e Value all of exempt supplies 20,000 (ES) + 20,000 (ES43) 40,000 o Value of a capital goods disposal off (exclusive of tax) 50,000 (SR with tax rate E6%) 50,000 o Value of incidental exempt supplies 20,000 (ES43) 20,000 Residual Input Tax Incurred 166,666.66 X 6% (TX-RE) 10,000.00
- 9. Therefore, IRR = (200,000 -50,000) / (200,000 + 40,000) - (50,000 + 20,000) = 0.8824 (88.24%).
- 10. The amount of residual input tax can claim for the period is,
- Residual Input Tax Recovery % X Residual Input Tax = 88.24% x Rm10,000 (TX-RE) = Rm8,824.00.
RMCD Reference:
We get the similar example from Partial Exempt guide by Royal Malaysian Customs Department.
See the screenshot below.
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