| # Deemed Supplies-Gifts: Taxable persons and values Deemed Supplies (Gifts) are applicable for the taxable entities directly connected to company or an organization. If a taxable person gives a gift to a person who is connected to the taxable person or for the benefits of sole proprietor or directors of the company is deemed as a supply and hence the taxable person is required to pay output tax based on the Open Market Value of the supply (gift). If the cost of goods is not more than RM 500, output tax need not be accounted for such items on the person, connected to the taxable person, a sole proprietor or directors of the company. Example Goods: If a Company gifts a (laptop) of worth RM1,500.00 to the Director’s son, the company must pay the GST for the laptop, since the value of goods is more than RM 500.00. A company gifts a used laptop to one of the Business Partners. In such a scenario, the company must consider the current open market value of the laptop, that is RM 450.00, for GST accounting, since the value of the goods has depreciated, the company is not required to pay output tax on the gift because the value of the goods is less than RM500.00. A gift presented by a taxable person to a connection (person) or to the sole proprietor or directors of the company, can calculate the GST value based on the use of open market value for the present cost (RM450.00) of the same good. Hence, the company is not liable for output tax. Services: The ABC Cleaning Services Company provided free service for a director's home. This service is considered a deemed supply. Hence company must pay output tax based on the OMV of the service provided. Goods used for non-business purpose: If an employee uses company’s goods for non-business purpose, output tax levied on the goods, must be paid by the employee. Value of Deemed Supplies (Gifts) The value of goods given to a taxable person(not subject to gift rule) is based on open market value which is inclusive of GST. The value of the supplied goods or services is calculated, based on the following sequential hierarchy: Value of identical goods Value of similar goods cost of producing, or cost of acquisition. |