Future Retention/Tax Invoice/CN/DN

Hi,
As  GST Malaysia Retention Payments (GST Transitional Issue Dated: 07/09/2018) Item 3 (ii) :-
Requested all future due retention sum in balance sheet (*for those contracts retention sum are under GST compliant period 01/04/2015 til 31/05/2018.). Must be issue out Tax Invoice on Aug 2018 (b4 1/9/18) to Client and for last submission GST 03 due date is 30/12/2018 (120 days).

After the Tax Invoice issued, currently some of our client requesting us to issue Credit Note to them to offset/reverse this Retention sum Tax Invoice.

Q1: If we provide this CN whether are acceptable in accounting terms /standard? (Tax Inv in 30/8/18 and CN
on 01/09/2018)
Q2: It is correct if the CN are issue to client as date after 01/09/2018 ? (only principle amount of retention)
Q3: If this CN will cause any impact  to us related government sector (**IRB/GST rule or any related dept) ?
Q4: Or the better option way is without issue any C/N to client,  in both parties account level internal to adjust
a reclassification double entry?
Q5:  If we issue CN in future the said retention sum is due for collection what the action doc’s we need to
provide again?
Q6:  If without issue any CN to client, when the retention sum is due to collect do we need to issue any Invoice?
Q7:  Currently our sub-contractor are also issue to us the same Tax Invoice in Aug 18 on the retention sum that we due to them, if the above CN are legally/acceptance treatment to action, we may need to request our sub-contractor issue us the Debit Note as same too.

Sorry to ask many questions, due we have call to some consultant/auditor, some replying never heard about or not sure the Credit Note thing whether can be done to accept or not encourage to issue C/N, but we need to reply a clear direction to our client.
Hope my questions can be reaching to you and Appreciated your help to reply and advice us. Do reply if you need any clarify on the above matter.  TQVM

Asked on November 8, 2018 2018-11-08 11:55:56 Business (商家)
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2 Answer(s)

Q1: If we provide this CN whether are acceptable in accounting terms /standard? (Tax Inv in 30/8/18 and CN on 01/09/2018).

A1. Yes it is acceptable if it is for work done before 1/6/2018.  You need to mention in your CN the actual purpose.

Q2: It is correct if the CN are issue to client as date after 01/09/2018 ? (only principle amount of retention).

A2. Yes. No more showing GST.

Q3: If this CN will cause any impact  to us related government sector (**IRB/GST rule or any related dept)?

A3. You need to refer to LHDNM or your tax agent on this matter.

Q4: Or the better option way is without issue any C/N to client, in both parties account level internal to adjust a reclassification double entry?

A4. You mean to write-off the amount?  For this you need to refer to your company auditor.

Q5:  If we issue CN in future the said retention sum is due for collection what the action doc’s we need to provide again?

A5. All documentation leading to this retention sum.

Q6:  If without issue any CN to client, when the retention sum is due to collect do we need to issue any Invoice?

A6. You need to issue invoice (no more tax invoice).

Q7:  Currently our sub-contractor are also issue to us the same Tax Invoice in Aug 18 on the retention sum that we due to them, if the above CN are legally/acceptance treatment to action, we may need to request our sub-contractor issue us the Debit Note as same too.

A7. Yes if it is issued before 1/9/2018.

The above answers are for guidance only.  To get a clearer and exact answers you have to consult the Officer at the Customs Office near your place.

Answered 7 days ago. 2018-11-09 03:42:14
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DG’S DECISION ON SST: 2/2018
ITEM 3:
RETENTION PAYMENTS (GST TRANSITIONAL ISSUE)

Contractor A started a construction project in 1.1.2017 and due to complete in
30.6.2020. There is progress billing issued by Contractor A to the client who is a
developer. Under this project, the developer may retain or hold a certain amount
of money payable to the contractor known as retention sum. Contractor A can only
claim the retention sum from the developer after the end of the defect liability
period which is 6 months after the completion of the project (according to the
contract).
Is Contractor A allowed to issue a tax invoice and account for GST in year 2020 after
the completion of the project for the retention sum in his final GST-03 return?

(i) Invoice issued before 1/9/2018
Contractor A is only allowed to issue a tax invoice relating to the retention sum before
1/9/2018 and account and pay for the output tax in his return for the last taxable period
which is not later than 120 days from 1/9/2018 according to section 6(2) of the Goods
and Services Tax (Repeal) Act 2018. However, contractor A is not allowed to issue a tax
invoice on or after 1/9/2018. If Contractor A issues the tax invoice to the developer
before 1/9/2018 and if the input tax is allowable then developer is entitle to make such
input tax claim in his return for the last taxable period.

(ii) Invoice issued before 1/9/2018
Contractor A may issue an invoice for the retention sum in year 2020 but he is required
to account and pay for GST on the retention sum in his return for the last taxable period
which is not later than 120 days from 1/9/2018. However, the developer is not allowed
entitled to claim input tax relating to the retention sum.

Answered 7 days ago. 2018-11-09 03:45:53
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