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GST on Health Care Services

By
Lion Wong Seng Chong
CA(M), FCCA(UK), FCA(SPORE),
FCTIM, CMIIA,
LLB(Hons) London,
Chartered Tax Advisor
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Scope of GST
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Scope of GST
GST is charged on:
Taxable supply of goods and services
By a Taxable Person
In the Course or Furtherance of Business
Made in Malaysia
GST is also charged on:
Imported goods and imported services
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WHAT IS SUBJECT TO GST?
Supply* of goods
Any kind of movable and immovable property but
excludes money
Supply* of services
Anything that is not goods, such as performance
of any duty or work for another
*Supply done for a consideration
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WHAT IS SUBJECT TO GST?
Types of
supplies
Taxable
Non-taxable
Standard-rated
6%
Zero-rated
0%
Exempt Out of scope
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SUPPLY
A supply if
done for consideration

Consideration (Section 2 GST Act)
any payment made or to be made, whether in money or
otherwise, or any act or forbearance, whether or not voluntary, in
respect of, in response to, or for the inducement of, the supply of
goods or services whether by the person or by any other person:

Provided that a deposit, whether refundable or not, given in
respect of the supply of goods or services shall not be considered
as payment made for the supply unless the supplier applies the
deposit as consideration for the supply
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SERVICES
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Services (Section 2 GST Act)

Services means anything done or to
be done including the granting,
assignment or surrender of any right or
the making available of any facility or
benefit but excludes supply of goods or
money.
PRIVATE HEALTHCARE FACILOITIES AND SERVICES ACT 1998
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Extract from Section 2. Interpretation
Private healthcare facility means any premises, other
than a Government healthcare facility, used or intended to
be used for the provision of healthcare services or health-
related services, such as a private hospital, hospice,
ambulatory care centre, nursing home, maternity home,
psychiatric hospital, psychiatric nursing home, community
mental health centre, hemodialysis centre, medical clinic,
dental clinic and such other healthcare or health-related
premises as the Minister may from time to time, by
notification in the Gazette, specify;
CASE STUDIES
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Morrisons Academy Boarding Houses Association
(In the course and furtherance of business)

A charity and limited company established
and maintained boarding houses for the
accommodation of pupils attending the
Academy.

CASE STUDIES
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Morrisons Academy Boarding Houses Association
(In the course and furtherance of business)

All income had to be put towards the promotion of
its objects, income not be distributed by way of
profit or dividend.

A charge was made to the parents of pupils
attending the school for the provision of
accommodation without profit.
CASE STUDIES
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Morrisons Academy Boarding Houses Association
(In the course and furtherance of business)

Is Morrison making supplies carried out in the course of
business?
Tax is not on profit or income but on taxable supplies
by taxable persons
Liability to tax not dependent on the motive of the
activities are carried on
No necessity for any commercial element in the
activities to bring the supplies within the scope of the
tax.
PRIVATE HEALTHCARE FACILITIES
Private healthcare facilities are referred to as any
premises, other than a Government healthcare facility,
used or intended to be used for the provision of
healthcare services or health-related services, such as:

Private hospital
Maternity home
Nursing home
Hemodialysis centre
Medical clinic
Dental clinic
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GST TREATMENT OF HEALTHCARE
SERVICES
Healthcare services can be categorize into four main treatment:

Healthcare services provided by the government are out of scope
supplies.
Healthcare services provided by private healthcare facilities are
exempt supplies.
Pharmaceutical services not provided by government or private
healthcare facilities are standard rated supplies.
Traditional and complementary medicine services not provided by
government or private healthcare facilities are standard rated
supplies.

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WHAT IS SUBJECT TO GST?
Standard-rated supplies @ 6%
Local sales of goods and services
Disposal of business assets, including trade-ins
Private use of business assets
Imported services
Gifts costing RM500 or more
Goods on hand at deregistration
Goods sold in satisfaction of debts
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WHAT IS SUBJECT TO GST?
Zero-rated supplies:
Agriculture products - Paddy
& fresh vegetables
Livestock supplies Meat,
muttons, swine, fish, prawn,
cockles, cuttlefish, crabs,
oyster, etc
Foodstuff rice, sugar, salt,
plain flour, cooking oil
Poultry & eggs
Supply of the first 300 units of
electricity to domestic users
Supply of water to domestic
users
Exported goods and services
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WHAT IS SUBJECT TO GST?
Exempt supplies:
Domestic transportation of
passengers for mass public
transport by rail, ships, boats,
ferries, express bus, feeder
bus and taxi
Highway toll
Residential property
Land for agricultural and
general use
Private health and education
Financial services
Funeral, burial and cremation
services in a package
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WHAT IS SUBJECT TO GST?
Out of scope supplies
Federal and State Government services, except certain
services by government department
Statutory body and local authority in respect of regulatory
and enforcement functions
Supplies made outside Malaysia
Supplies by a non-registered person
Private transactions
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BUDGET 2015 (FUEL)
Fuel (Zero-rated)
Ron 95 , Diesel and LPG will be exempted from
GST implementation as part of Budget 2015. This
move is to ensure that the implementation of GST
will not burden the rakyat after recent fuel hike.

Ron 95
Diesel
LPG

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BUDGET 2015 (FUEL)
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Fuel (Standard-rated)
Ron 97 fuel however will be subjected to the
new GST tax. Previously, there were
confusion when Malaysian Royal Custom
Department listed fuel as non zero rated item
while deputy finance minster maintained
that the Ron 95 fuel is a GST zero rated item.

Ron 97
BUDGET 2015 (ELECTRICITY)
Electricity (Standard-rated)
The government has also raised GST for
electricity from the previous 200 units to
300 units which means that a household
will have GST tax (Standard-rated) on
electricity bill after exceeding the 300
units usage. This is believe to benefits
70% of the household in Malaysia.

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BUDGET 2015 (FOOD)
Food (Zero-rated)
GST zero rated items on basic food
supplies has been widened based on
input from all levels in the society.

The Government has agreed to add
more zero rated GST items, which
includes:


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BUDGET 2015 (FOOD)
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All types of imported and local fruits,
Wholemeal bread and white bread,
Coffee powder, cocoa powder, tea dust
Meehoon, yellow noodle, kuey teow, laksa,
National Essential Medicine covering 2,900
brands. These brands are used to treat
diseases ranging from diabetes, heart
failure, cancer, hypertension and fertility.
BUDGET 2015 (BOOKS)
Books
Books and reading materials such as
reference book, exercise book, text
book. religious book and newspaper will
also be exempted from GST
implementation.

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Mechanism of GST
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MECHANISM OF GST
What is Output tax?
GST collected from customers on behalf
of Customs.
Output tax is charged when you supply
taxable goods or services in Malaysia.
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MECHANISM OF GST
What is Input tax?
GST paid to suppliers.
Input tax is paid when you purchase
taxable goods or services in Malaysia or
when you import goods.
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MECHANISM OF GST
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MECHANISM OF GST
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MECHANISM OF GST
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MECHANISM OF GST
Wholesaler (Standard-rated)
RM
GST payable by customer (6%) 10.50

Less: GST payable to supplier (6.00)

Net GST to be paid to Customs 4.50
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MECHANISM OF GST
GST rate at 6%
Final consumer pays RM106,000
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MECHANISM OF GST
GST AT 0%
Zero-rated
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Consumer
no need to
pay GST.
MECHANISM OF GST
Wholesaler (Zero-rated)
RM
GST payable by customer (0%) -

Less: GST payable to supplier (5,000.00)

GST to be claimed back from Customs (5,000.00)

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MECHANISM OF GST
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MECHANISM OF GST
Wholesaler (Exempt)
RM
GST payable by customer (0%) -

Less: GST payable to supplier (8,000.00)

Cannot claim input tax credit -
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MECHANISM OF GST
GST charged on
taxable supplies
GST paid on
business purchases
Net GST refund
from Customs
Pay GST to
Customs
Net GST
Output
Tax
Input Tax
Less
Equals
Plus (+)
Minus (-)
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MECHANISM OF GST
Sample of GST Return

Calculation of output tax
Value of taxable supplies made
Output tax

Calculation of input tax
Value of taxable supplies received
Input tax

Net tax payable/refundable
GST payable (2 4)
GST refundable (4 2)
RM1,000,000
RM 60,000
RM 24,000
1
2
3
4
5
6
RM 600,000
RM 36,000
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MECHANISM OF GST
Sample of GST Return

Calculation of output tax
Value of taxable supplies made
Output tax

Calculation of input tax
Value of taxable supplies received
Input tax

Net tax payable/refundable
GST payable (2 4)
GST refundable (4 2)
RM1,000,000
RM 60,000
RM 36,000
1
2
3
4
5
6
RM 1,600,000
RM 96,000
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Input Tax Credit
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INPUT TAX CREDIT
What is input tax credit?

GST incurred on your purchases of goods
or services which you can claim.
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INPUT TAX CREDIT
Types of
supply
Output tax Input tax
Standard-rated

6% Claimable
Zero-rated 0% Claimable
Exempt N/A Not claimable
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INPUT TAX CREDIT
You are entitled to claim when:
You are a GST registered person.
The input tax has been incurred.
The input tax is allowable, ie. Not blocked.
The input tax is a result of acquiring goods or
services (local or imported) for business use.
The goods or services are consumed in Malaysia

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INPUT TAX CREDIT
To claim input tax credit, you must have:
Full tax invoice (for GST payable > RM30)
Simplified tax invoice (for GST payable RM30 and
below)
Tax invoice in the name of taxable person
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FULL TAX INVOICE
A full tax invoice should contain the following
information:
the word tax invoice in a prominent place;
the tax invoice serial number;
the date of issuance of the tax invoice;
the name, address and identification number of
the supplier;
the name and address of the person to whom the
goods or services are supplied;
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FULL TAX INVOICE
Description to identify the goods or services supplied;
For each description, distinguish the type of supply
for zero rate, standard rate and exempt, the quantity
of the goods or the extent of the services supplied
and the amount payable, excluding tax;
any discount offered;
the total amount payable excluding tax, the rate of tax
and the total tax chargeable to be shown separately;
the total amount payable inclusive of the total tax
chargeable
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SIMPLIFIED TAX INVOICE
A simplified tax invoice can be issued regardless of
any sales amount in the form of an invoice, receipt,
voucher or any other similar document provided it
contains the following particulars:

the name, address and identification number of
the supplier;
the date of issuance of the tax invoice;
the tax invoice serial number;
a description sufficient to identify the goods or
services supplied;


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SIMPLIFIED TAX INVOICE
for each description, distinguish the type of
supply for zero rate,
standard rate and exempt, the quantity of the
goods or the extent of the services supplied
and the amount payable, including tax;
the total amount payable inclusive of total tax
chargeable; and
the rate of tax and the amount of tax
chargeable.
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BLOCKED INPUT TAX
Passenger motor car* including hiring of car.
Family benefits.
Club subscription fee.
Medical and Personal Accident insurance.
Medical Expenses.
Entertainment expenses: -Family members and
potential clients.
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BLOCKED INPUT TAX
Exclusion to passenger motor car:
Public service or tourism motor cars.
Hire and drive cars or cars sold by second hand car
dealers.
Cars issued for driving instructional purposes by
driving schools.
Cars forming part of stock in trade.
Cars used for exclusively business purposes
approved by Director General.

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THANK YOU
LION WONG SENG CHONG
Email: lauwyeo18@gmail.com
Tel : 09-5144875 (O)
09-5144876 (O)
H/P: 019-986 6740
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