GST Alert: Property Tax Rebate and Rental Waiver

As part of the collective effort in managing the impact COVID-19 has on tenants and owners of non-residential properties, rental waivers in full or in partial (“Rental Waiver”) have been extended on top of passing property tax and enhanced property tax rebate1 (“the Rebate”) to support tenants to tide over this challenging period.

To facilitate GST registered property owners and tenants in aligning and managing the GST reporting requirements as well as risk covering such arrangements relating to the Rebate and Rental Waiver, we have summarised them into salient points as shown below:

Category From the perspective of:
Property Owner(s) Tenant(s)
Received from IRAS Given to Tenant(s) Received from Property owner(s)
Property Tax & Enhanced Property Tax Rebate ("the Rebate") (i) GST classification

Consider as discount applied on property tax payable

Considered as discount applied on monthly rental receivable (excluding GST)

Considered as discount applied on monthly rental payable (excluding GST)

(ii) GST return(s) reporting position

GST reporting is not necessary as this is an out of scope transaction

Boxes 1 & 6 will be based on net monthly rental and GST value receivable (after deducting the Rebate)

Boxes 5 & 7 will be based on net monthly rental and GST value payable (after deducting the Rebate)

Full/Partial Voluntary Rental Wavier ("Rental Waiver") (i) GST classification

Considered as discount applied (in addition to the Rebate) on net monthly rental receivable (excluding GST)

Considered as discount applied (in addition to the Rebate) on net monthly rental payable (excluding GST)

(ii) GST return(s) reporting position

Boxes 1 & 6 will be based on net rental and GST value receivable (after deducting the Rebate & Rental Waiver)

Boxes 5 & 7 will be based on net monthly rental and GST value payable (after deducting the Rebate & Rental Waiver)

 

We have further illustrated three common scenarios below that GST registered property owners and tenants need to know with regards to GST reporting position for the upcoming quarter(s):

Illustration 1: Passing the Rebate from Property Owners to Tenants:

Description Value (S$) GST return(s) reporting position from the perspective of:
Property Owner(s) Tenant(s)
Monthly rental due

5,000

the Rebate applied^

(800)

Monthly rental due excluding GST (after deducting the Rebate)

4,200

Box 1

Box 5

7% GST (S$4,200 x 7%)

294

Box 6

Box 7

Monthly rental due including GST

4,494

   

 

Illustration 2:  Passing the Rebate and Granting Rental Waiver (Full) from Property Owners to Tenants:

Description Value (S$) GST return(s) reporting position from the perspective of:
Property Owner(s) Tenant(s)
Monthly rental due

5,000

the Rebate applied^

(800)

Monthly rental due  (after deducting the Rebate)

4,200

Rental Waiver (Full) granted^

(4,200)

Monthly rental due excluding GST (after deducting the Rebate & Rental Waviver) *

0

Box 1

Box 5

7% GST (S$0 x 7%)  *

0

Box 6

Box 7

Monthly rental due including GST

0

   

 

Illustration 3:  Passing the Rebate and Granting Rental Waiver (Partial) from Property Owners to Tenants:

Description Value (S$) GST return(s) reporting position from the perspective of:
Property Owner(s) Tenant(s)
Monthly rental due

5,000

the Rebate applied^

(800)

Monthly rental due (after deducting the Rebate)

4,200

Rental Waiver (Partial) granted^

(2,100)

Monthly rental due excluding GST (after deducting the Rebate & Rental Waviver)

2,100

Box 1

Box 5

7% GST (S$2,100 x 7%)

147

Box 6

Box 7

Monthly rental due including GST

2,247

   

^ Amount illustrated excludes GST

* Deeming of output tax is not required considering the intent is to tide tenant(s) through this period so that they could continue with their tenancies. 

Besides the above, GST registered property owners and tenants need to ensure their GST reporting position covering other supply and purchase transactions are aligned with GST requirements as an on-going process to minimise potential penalty/fine should an IRAS GST audit be initiated.   

We support GST registered businesses to minimise and manage GST risks by utilising technology and applying specific industry knowledge to help them manage their GST position effectively and practically.

 

For more information, contact our team of GST professionals:

Richard Ong, Partner & Head (GST Services)
Accredited Tax Advisor (GST)
T +65 6594 7821
[email protected]

Huang Yanlin, Director (GST Services)
Accredited Tax Advisor (GST)
T +65 6715 1142
[email protected]

Lee Meow Ling, Senior Manager (GST Services)
Accredited Tax Advisor (GST)
T +65 6715 1143
[email protected]

 

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1       The property tax and enhanced property tax rebate for non-residential properties announced during the FY2020 Budget and FY2020 Supplementary Budget covers a discount ranging from 30% to 100% of property tax payable by property owner(s) for 1 January 2020 to 31 December 2020.