The Definitive Short Guide on how GST impacts investment

GST replaces Sales Tax which is generally @ 10% and Government Service Tax @ 6%

GST DOES NOT replaces service charge levied by hotels, restaurants, which is also at 6%. So when you dine at restaurant which states buffet dinner is at RM 70++, the first + refers to GST (used to be government service tax @ 6%) and service charge at 10%

Note the Difference!

Although both are borne by consumers, GST is collected by business operators to be paid to Customs Dept,while Service Charge is collected by business operators as part of their business income.

On how GST affects investment & financial services – below:

Type of Investment ActivitySubject to Sales or Service Tax?Subject to GST?
Buy residential propertyNoNo
Buy commercial propertyNoYes
SPA legal feeYesYes
Loan agreement legal feeYesYes
Bank loan processing feeNoYes
Bank loan interestNoNo
Rental income from residential propertyNoNo
Rental income from commercial propertyNoYes for GST registrant
No for non-GST registrant
Maintenance feeNoYes
Sell residential propertyNoNo
Sell commercial propertyNoYes for GST registrant
No for non-GST registrant
Gain from disposal of propertyNoNo
Type of Investment ActivitySubject to Sales or Service Tax?Subject to GST?
Purchase of sharesNoNo
Brokerage feeNoYes
Sale of SharesNoNo
Capital gain on sale of sharesNoNo
Purchase of unit trustNoNo
Sale of unit trustNoNo
Capital gain from sale of unit trustNoNo
Purchase of goldNoYes
Sale of goldNoYes for GST registrant No for non-GST registrant
Capital gain on sale of goldNoNo
Type of Insurance ActivitySubject to Sales or Service Tax?Subject to GST?
Purchase of whole life traditional policyNo for individual
Yes for company
No
Purchase investment-linked policyNo for individual
Yes for company
No
Fees such as management fee, etc charged by insurer is standard rated
Purchase of standalone medical policyNo for individual
Yes for company
Yes
Purchase of a rider attached to a policyNo for individual
Yes for company
Yes - premium paid for the rider
No - premium paid for the life insurance portion is exempt
Purchase of general insurance - such as motor, fire, houseowner, householder policyNo for individual
Yes for company
Yes
Purchase of annuity/endowment policyNo for individual
Yes for company
No
Purchase of personal accident (PA) policyNo for individual
Yes for company
Yes
Type of SupplyOutput TaxInput Tax
Standard Rated6%Claimable
Zero-rated
Example:
a) Supply of 1st 200 unit of electricity to domestic household for minimum 28 days
b) Supply of treated water to domestic consumer
c) Agriculture products
d) Livestock supplies
e) Seafood
f) Poultry and eggs
g) Exported goods/services
0%Claimable
Exempt
Example:
a) Land used for agriculture, residential, general use
b) Buildings for residential
c) Financial services
d) Childcare services
e) Private healthcare
f) Private education services
g) Domestic transportation
h) Tolled highway
i) Funeral, burial, cremation services
No GSTNOT Claimable
Out of scope
Regulatory services provided by government
Example:
a) QUit rent and assessment
b) Summons and finesl
c) Permits and licenses
d) Passports
Not ApplicableNot Applicable

As you can see – the most critical products/services is the Exempt category – because one way or another there will be a transfer of the increased costs absorbed by business operators to end consumers.

Here’s some info from Customs dept recently-

GST prices Customs

Adapted from GST Planning for Business and Consumers (Kanyin Publications), An Uncle’s Guide to GST by Choong Kwai Fatt

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