26 October 2012

On 19 October 2012, the Inland Revenue Authority of Singapore (IRAS) issued an updated GST Guide, “GST incurred on purchase of land for residential development (Fifth edition)”.

Paragraph 2 of Part 1 of the Fourth Schedule to the Goods and Services Tax Act (Cap 117A) exempts the sale and lease of residential properties. The sale and lease of all other properties aside from those specified under this paragraph will be subject to GST when supplied by a GST registered person.

A GST-registered developer may claim the GST incurred on the purchase of land if the intention is to develop the land for non-residential use to generate taxable supplies. If the intention is to develop the land wholly or partially for residential use to make exempt supplies, GST incurred on that part of the land is not claimable.

To relieve GST-registered developers from the GST paid on land purchased for residential development (whether wholly or partially), the Comptroller can allow the GST incurred to be attributable to the making of taxable supplies. This is provided under regulation 41 of the GST (General) Regulations.

This e-tax guide clarifies:

• The application of regulation 41 of the GST (General) Regulations to a GST-registered person, and
• The circumstances under which the Comptroller may consider to allow the same relief to a non-registered person via remission.

In this fifth edition, revisions were made to certain paragraphs to reflect the legislative amendments made to the Fourth Schedule and section 89 of the Goods and Services Tax Act, as well as to clarify on the required documentation.

Source: This article was extracted from the Inland Revenue Authority of Singapore (IRAS) website. Visit www.iras.gov.sg for more information.