Section 3 – Taxable Supplies, Value of Supply & Time of Supply

(< Section 2 – How does GST work?)

TAXABLE SUPPLIES

Supply means to provide, serve or furnish something. This is normally the situation where one person supply something to a receiver in return for a consideration.

Taxable supplies therefore covers the following items in general:-

  • Sale of goods
  • Provision of services
  • Business gift exceeding RM500 given to the same person (including employees) in a year

The list above is not exhaustive and also exceptions to the rule for business gift.

VALUE OF SUPPLY

Whenever there is a monetary payment, Value of Supply shall be the full payment less GST portion. However, when payment is not in money form, then the Value of Supply shall be based on Open Market valuation.

The reason why we need to bother about the value of supply is because it affects the amount of GST we need to pay. Below are instances where money received is not consideration:-

  • Dividends
  • Grants
  • Approved donations
  • Loan repayment
  • Capital injections
  • Disbursements
  • Compensation (including LAD)

TIME OF SUPPLY

GST is “created” once the delivery of goods and/or provision of services is completed. The Time of Supply is determined using the following definitions:-

Supply of Goods

  • the time when customers receives goods from the supplier; or
  • the time when goods are made available to the customers, pending collection.

Supply of Services

  • Time of Supply is the date of payment or part payment received; or
  • Tax Invoice is issued earlier than receipt of payment/part payment; or
  • If the Tax Invoice is issued within 21 days from date of Goods Removed, then the Time of Supply is the Tax Invoice date; or
  • If the Tax Invoice is issued after 21 days from date of Goods Removed, then the Time of Supply is the date of Goods Removed.

In the next article, we will talk about non-allowable input tax, bad debts relief, record keeping & offences & penalties.

Important Notice: KLM’s personnel and accounting software are GST ready, and we are able to prepare the accounting and recording of entries into the accounting system. However, we DO NOT provide GST advisory on your business transactions. We suggest that you seek advice directly from GST advisors licensed by the Royal Malaysian Customs Department.