GST On Legal Practitioners

GST ON LEGAL

PRACTITIONERS

Loh Boon HowChartered

Accountant

2

Where is the service provided?

B. H. Loh & Associates

Local Legal practitioner Oversea customer

Billing in Malaysia

Supply exported (0%)

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Where is the service provided?

B. H. Loh & Associates

Foreign Legal practitioner

Local customer

Corporation – account for it

Supply imported (6%)

Individual – not account for it

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Where is the service provided?

B. H. Loh & Associates

Local Legal practitioner Designated area

Labuan

Supply exported (0%)

TiomanLangkawi

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Where is the service provided?

B. H. Loh & Associates

Designated area Legal practitioner (registered and account GST) Customer in Malaysia

Labuan

Supply imported (6%)

TiomanLangkawi

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Where is the service provided?

B. H. Loh & Associates

Designated area Legal practitioner

Customer at Designated area

Labuan

Disregarded Supply (No GST)

TiomanLangkawi

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What are the service charged? All charges

1. Contentious or non-contentious business,

2. Preparing and completing agreements,

3. Conducting and completing the transaction,

4. Prepare a filing,

5. Witnessing of miscellaneous documents

B. H. Loh & Associates

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What are the service charged? Miscellaneous expenses

1. Cost of extra work,

2. Travelling or accommodation,

3. Allowances for the solicitor and clerks,

4. Copying and stationery.

B. H. Loh & Associates

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What are the service charged? Interest charged on late payment – No

GST (An out of scope supply).

B. H. Loh & Associates

Who is liable to register?

B. H. Loh & Associates10

Sole proprietorship

Conventional Partnership

GST Registration

RM500,000

12 succeeding / preceding

months

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What is the annual turnover? All charges, Other charges excluded the

disbursement, Deemed supplier such as private use of

business assets, If branches – combined the turnover

from all branches,

B. H. Loh & Associates

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What is the condition to register a branch separately?

(a) Every separately registered branch has the same taxable period.

(b) It is likely to cause difficulty for taxable person to submit a single return.

(c) All branches must registered although one branch is below threshold.

B. H. Loh & Associates

B. H. Loh & Associates 13

What is the condition to register a branch separately?

(d) Each branch will be given a separate GST number and make their own return. However, the main branch remains accountable for all GST liability for all branches.

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When is the time to charge output tax?

(a) The date of receipt of payment;

(b) The date of issue of a tax invoice, or

(c) When the money transfers from the client’s account to the office account

However, upon completion of services and you issued a tax invoice within 21 days, you accounted GST based on the date of invoice.

B. H. Loh & Associates

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When is the time to charge output tax? If the deposit part of the consideration –

GST chargeable when the time of the deposit.

If the deposit is used as security and fully refunded – No GST will be chargeable.

B. H. Loh & Associates

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What is chargeable income? Non-billed income : oath fees

1. Subject to GST, as consideration for supply of service,

2. Not subject to GST, if the individual retains the fee in a personal capacity,

B. H. Loh & Associates

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What is a disbursement? A payment on behalf of a client for goods

and services to a third party The condition :

1. The legal practitioner acted for his client when paying the third party.

2. The client actually received and used the goods or services provided by the third party.

3. The client knows that the goods or services would be provided by the third party.

B. H. Loh & Associates

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What is a disbursement?4) The client authorized the legal practitioner

to make payment on his behalf.

5) The client was responsible for paying the third party.

6) The payment is separately itemized when invoicing the client.

7) The legal practitioner recovers only the exact amount which he paid to the third party.

B. H. Loh & Associates

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What is a disbursement?8) The goods and services paid for are

clearly additional to the supplies which the legal practitioner makes to the client.

Disbursements include statutory fees such as stamp duties, estate duties, court fees, land registry fees and payment for expert witness, professional services of third parties.

B. H. Loh & Associates

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What are the general expenses?

1. General expenses such as telephone, telex, postage, advertising, and stationery charges are incurred in the course of providing services to the client,

2. Report for his own use – general expenses,

3. Passes on the report to his client – disbursement.

B. H. Loh & Associates

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How to claim an input tax? The disbursement without GST – the

legal practitioner and client not allow to claim an input tax,

The disbursement with GST – the legal practitioner and client can claim the input tax.

B. H. Loh & Associates

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Who can claim an input tax? The recipient of the service or goods is

entitled to recover the GST.

B. H. Loh & Associates

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How do I account for GST during the spanning periods?

B. H. Loh & Associates

1/4/2015

GST implementation

Service tax GST

Apportioned by time spent, transactions or number of court attendance.

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B. H. Loh & Associates

Address :

No. 1-3-15, Goldhill Complex,

Tingkat Paya Terubong 1,

11060 Penang.

H/P No. : 016-4893382

Email : bhlohass@gmail.com

Web-site / facebook : bhloh.com.my

B. H. Loh & Associates

Thank you