5 March 2013

Deemed output tax arises when input tax was allowed on the purchase or import of the following:
• business assets that are put to personal or non-business use, and
• gifts that costs more than $200 each.

To account for the output tax, the asset owner or gift giver has the following two options:

1. Pay for the output tax. In this case, the asset user or gift recipient cannot claim the GST as input tax, or

2. Have the asset user or gift recipient pay for the output tax. In this case, the asset user or gift recipient will be able to claim the GST paid as input tax if he/she can satisfy the conditions for input tax claim.

Unlike normal transactions, a tax invoice should not be issued to the asset user or gift recipient to support his/her claim for input tax. Instead, the asset owner (with effect from 1 March 2013) or gift giver may issue a tax certificate to the asset user or gift recipient if the asset user or gift recipient:
• pays for the deemed GST output tax, and
• is GST-registered.

The following details must be shown on a tax certificate:
• the word “Tax Certificate”
• a description of the goods used for free and deemed GST amount based on the full cost of providing the deemed services, and
• the statement “Deemed GST on this supply is paid by the recipient.

Source: Inland Revenue Authority of Singapore (IRAS).