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: Formula:<br /> | : Formula:<br /> | ||
::'''IRR = (T-O1) / (T+E-O2)'''<br /> | ::'''IRR = (T-O1) / (T+E-O2)'''<br /> | ||
{| class="wikitable" | |||
|- | |||
! IRR !! % !!The recoverable percentage of residual input tax or known as Input Tax Recoverable Rate (IRR) | |||
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| T || (SR + ZRL+ ZDA + ZRE + DS + OS + RS + GS) || The total value (exclusive of GST) of all taxable supplies which are the sum of all standard-rated supplies, zero-rated supplies (Local), zero-rated supplies (Export), deemed taxable supplies, supplies made outside Malaysia which would be taxable if made in Malaysia, relief supplies, and isregarded supplies made in the taxable period. | |||
|- | |||
| E || (ES) || The total value (exclusive of GST) of exempt supplies made in the taxable period. | |||
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| O1 || Example || The total value (exclusive of GST) of '''all excluded taxable supplies'''. | |||
|- | |||
| O2 || Example || The total value (exclusive of GST) of '''all excluded taxable supplies''' and '''all excluded exempt supplies'''. | |||
|} | |||
::O = Total Value of excluded the following supplies made in the taxable period. | ::O = Total Value of excluded the following supplies made in the taxable period. |
Revision as of 07:43, 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
De Minimis Rule (DmR)
- To satisfy the De Minus Rule:
- 1. Total Exempt Supply (ES) <= Average Rm5,000.00 per month; AND
- 2. DMR <= 5%
- Formula:
- DmR = [E / (T + E)] x 100%
Supplies Tax Code Explanation T (SR + ZRL + ZDA + ZRE + DS + OS + RS + GS) The total value (exclusive of GST) of all taxable supplies which are the sum of all standard-rated supplies, zero-rated supplies (Local), zero-rated supplies (Export), deemed taxable supplies, supplies made outside Malaysia which would be taxable if made in Malaysia, relief supplies, and disregarded supplies made in the taxable period. E (ES) The total value (exclusive of GST) of exempt supplies made in the taxable period which NOT include incidental exempt supplies.
NOTE : (i) IES is only for incidental supplies, therefore will not be part of the de minimis rule formula (DmR). (ii) This formula functions is only to test the percentage and value that qualify for de minimis rule. (iii) Accounting software users should apply DmR on their TX-ES transactions.
The application for de minimis rule as stated below: (i) Application of incidental exempt supplies to the de minimis rule. (ii) Applying the de minimis rule in a taxable period. (iii) Applying the de minimis rule in a tax year or longer period.
Input Tax Recoverable Ratio (IRR)
- Formula:
- IRR = (T-O1) / (T+E-O2)
- IRR = (T-O1) / (T+E-O2)
IRR | % | The recoverable percentage of residual input tax or known as Input Tax Recoverable Rate (IRR) |
---|---|---|
T | (SR + ZRL+ ZDA + ZRE + DS + OS + RS + GS) | The total value (exclusive of GST) of all taxable supplies which are the sum of all standard-rated supplies, zero-rated supplies (Local), zero-rated supplies (Export), deemed taxable supplies, supplies made outside Malaysia which would be taxable if made in Malaysia, relief supplies, and isregarded supplies made in the taxable period. |
E | (ES) | The total value (exclusive of GST) of exempt supplies made in the taxable period. |
O1 | Example | The total value (exclusive of GST) of all excluded taxable supplies. |
O2 | Example | The total value (exclusive of GST) of all excluded taxable supplies and all excluded exempt supplies. |
- 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.
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
RMCD Reference: We get the similar example from Partial Exempt guide by Royal Malaysian Customs Department. See the screenshot below. ::![]()