<?xml version="1.0" encoding="utf-8"?>
<ManualTopic ID="/baanerp/tf/onlinemanual/000010" xml:lang="en">
   <Header>
      <Title>Deemed Supplies</Title>
      <Keyword type="header" order="d1e1625063">
         <Level1>Deemed supplies, gifts</Level1>
      </Keyword>
   </Header>
   <AimSection>
      <Paragraph>Deemed supplies (Gifts) are provided to employee by the employer
		as a part of gift rule. The goods are bought for business processes, which are
		provided as supplies (goods or services) for private consumption.</Paragraph>
   </AimSection>
   <GeneralSection>
      <Paragraph>Deemed supplies are referred to any goods or services provided
		free to employees. The supplies include any right, privilege, service or
		facility provided free of charge to employees. Goods and services acquired and
		given as supplies are considered as used for the purpose of business.</Paragraph>
      <Paragraph>The tax levied for the deemed supplies (Gifts) is provided
		considering the output tax. You can use the <GUIRef href="/baanerp/tf/gld/tfgld9230m000" role="session">Post Deemed Supplies - Gifts output Tax (tfgld9230m000)</GUIRef> session to update the
		output tax and tax registers. You can specify the GST related parameter
		settings such as ledger accounts, tax codes, warehouse orders, and transaction
		type in the <GUIRef href="/baanerp/tf/gld/tfgld9120m00c" role="session">GST Parameters (tfgld9120m00c)</GUIRef> session.</Paragraph>
   </GeneralSection>
   <GeneralSection>
      <SectionTitle>GST on Deemed Supplies-Gifts (For Employee)</SectionTitle>
      <Paragraph>Deemed Supplies(Gifts) cover a wide range of right, privilege,
		or facilities provided free of cost, to employees and are not covered as part
		of the employee contract from the employer that is a clause in contract of
		employment. But if the clause is not covered in the employment contract, 
		GST tax is applicable for such supplies entitled to the employee. The
		output GST is levied on the donor(employer) if the value of the gift provided
		to the employee is more than MYR 500 in a year. Example Company XYZ purchased 15 hampers of
		MYR200 each, for the employees. In this case, Output tax is not charged on the
		Company XYZ. But an input tax incurred on the purchase of MYR3, 000.00, is
		claimable.</Paragraph>
      <GeneralSection>
         <SectionTitle>Types of Supplies for employees</SectionTitle>
         <Paragraph>The type of supplies includes goods provided free of charge,
		  interest free loan, leave passage, provision of accommodation and provision of
		  transport.</Paragraph>
         <List>
            <ListItem>Good: Based on GST rules, if the cost covered of goods
			 provided to employees, is not more than RM500.00, the employer does not have to
			 account for output tax except for those covered under Blocked Input Tax
			 Recovery or are covered as part of the employment contract policies.</ListItem>
            <ListItem>Services: GST is applicable only, if the services provided
			 to the employees include using business assets. whether or not for a
			 consideration.</ListItem>
         </List>
         <Note>
            <SectionTitle>Note</SectionTitle>
            <List>
               <ListItem>If goods and services purchased from the third party,
				which is not a GST registered entity, Output tax is not levied. In such cases,
				an input tax claim is also not applicable. However, if the cost of the goods
				provided to the employee’s exceeds the MYR500 value, GST is levied. Example XYZ has purchased
				a 32” LED television for MYR1,000.00 from AA Enterprise, which is not
				registered for GST. Consequently, output tax is applicable to XYZ for the gift
				presented to the employee.</ListItem>
               <ListItem>If the goods purchased have input tax levied, which is not
				allowed as a credit under GST Regulations, input tax cannot be claimed during
				the supply of these goods. Hence the supply of goods is not regarded as a
				supply for the taxable entity and Output tax is not applicable. Example A car used by the
				organization for a period of five years is presented to the employee. In such
				cases, the input tax levied on the car is not allowed as credit, hence Output
				GST is not applicable.</ListItem>
            </List>
         </Note>
      </GeneralSection>
   </GeneralSection>
   <GeneralSection>
      <SectionTitle>Deemed Supplies-Gifts: Taxable persons and
		values</SectionTitle>
      <Paragraph>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.</Paragraph>
      <GeneralSection>
         <SectionTitle>Example</SectionTitle>
         <Paragraph>Goods:</Paragraph>
         <List>
            <ListItem>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.</ListItem>
            <ListItem>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.</ListItem>
         </List>
         <Paragraph>Services:</Paragraph>
         <List>
            <ListItem>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.</ListItem>
         </List>
         <Paragraph>Goods used for non-business purpose:</Paragraph>
         <Paragraph>If an employee uses company’s goods for non-business purpose,
		  output tax levied on the goods, must be paid by the employee.</Paragraph>
         <GeneralSection>
            <SectionTitle>Value of Deemed Supplies (Gifts)</SectionTitle>
            <Paragraph>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.</Paragraph>
            <Paragraph>The value of the supplied goods or services is calculated,
			 based on the following sequential hierarchy:</Paragraph>
            <List>
               <ListItem>Value of identical goods</ListItem>
               <ListItem>Value of similar goods</ListItem>
               <ListItem>cost of producing, or</ListItem>
               <ListItem>cost of acquisition.</ListItem>
            </List>
         </GeneralSection>
      </GeneralSection>
   </GeneralSection>
   <GeneralSection>
      <SectionTitle>Calculating Output Tax</SectionTitle>
      <Paragraph>Output tax can be calculated on a monthly or yearly basis. The
		data for Deemed Supplies- Gifts is derived from the GST parameters sessions. It
		is calculated separately for both types of GST (Output Tax and Input
		Tax).</Paragraph>
      <GeneralSection>
         <SectionTitle>To calculate the Output GST for a specific
		  year/period:</SectionTitle>
         <List>
            <ListItem>Specify the maximum amount to be considered for GST
			 calculation in the <GUIRef href="/baanerp/tf/gld/tfgld9120m00c" role="session">GST Parameters (tfgld9120m00c)</GUIRef> session.</ListItem>
            <ListItem>If the supplies provided to the employee cross the margin of
			 MYR 500, Output GST is considered on the same account.</ListItem>
         </List>
         <Note>
            <SectionTitle>Note</SectionTitle>
            <Paragraph>In the <GUIRef href="/baanerp/tf/gld/tfgld9230m000" role="session">Post Deemed Supplies - Gifts output Tax (tfgld9230m000)</GUIRef> session:</Paragraph>
            <List>
               <ListItem>Specify the year/period for which the GST must be
				calculated.</ListItem>
               <ListItem>If the period is specified, and the cumulative amount
				exceeds MYR 500 in a given month, charge for GST is made on the amount 500 or
				above it.</ListItem>
               <ListItem>Click <GUIRef href="/baanerp/tf/gld/tfgld9230m000#exec.cont.process" role="manual">Process</GUIRef> to generate the list of employees on whom the
				GST is levied.</ListItem>
            </List>
         </Note>
         <List>
            <ListItem>If the total gift value is more than 500 or more or equal to
			 the amount specified <GUIRef href="/baanerp/tf/gld/tfgld9120m00c" role="session">GST Parameters (tfgld9120m00c)</GUIRef> session, the GST is calculated based on the %
			 specified in the <GUIRef href="/baanerp/tf/gld/tfgld9120m00c#tfgld920.otvc" role="manual">Tax Code</GUIRef> field in the parameter session.</ListItem>
         </List>
      </GeneralSection>
   </GeneralSection>
</ManualTopic>