Singapore Property Frontiers

I REFER to the letters, ‘Why GST on condo sinking fund?’ (ST, Oct 11 and ‘GST on management, sinking funds inequitable’ (ST, Oct 11).

The Goods and Services Tax (GST) is chargeable on supply of goods and services, i.e., anything done for a consideration.

GST-registered persons have to charge and account for GST at the earliest happening of one of three events, viz., when the service is provided, or when the payment is received or when the tax invoice is issued.

Take, for example, the payment to a GST-registered person for a year’s pest-control services, to be undertaken once a quarter and with extermination services to be performed upon discovery of significant pest problems. GST is charged and payable on the entire payment even though the pest-control service is not to be done immediately and no extermination service may eventually be undertaken.

A management corporation (MC) is a body corporate set up to provide the services of controlling and maintaining the common property and for which it levies a contribution. The services are non-specific and performed continually.

The MC decides on how best to perform the services, be it through regular inspection and maintenance, ad hoc repairs of carparks, lifts and club facilities, etc, one-time major repairs, or extension of facilities such as the building of covered shelters.

The MC collects fees for the whole range of non-specific services. GST has to be charged on the fees collected, regardless of when and how it chooses to perform its services.

There is no double payment of GST by the owners arising from the MC engaging a contractor to perform repair works.The latter is a separate transaction between the MC and the contractor. The GST-registered contractor charges the MC for his services, including GST. The MC disburses the payments for those services, including GST, from its funds, and then claims the GST incurred from the Inland Revenue Authority of Singapore (Iras) as its input tax.

For more information on GST on MC’s contribution, please refer to the Iras website.

Yvonne Yim Seon Young (Ms) Principal Corporate Communications Officer Inland Revenue Authority of Singapore

Source : Straits Times - 27 Oct 2007