The Inland Revenue Authority of Singapore (IRAS) has issued a reminder to Goods and Services Tax (GST)-registered businesses regarding common errors identified during its audit programme, particularly targeting entities with low-value GST refund claims. A key clarification emphasizes that businesses operating from home cannot claim input tax on housing-related expenses.
The advisory, published on the IRAS website today, outlines several recurring compliance failures uncovered during recent audits:
- Invalid Claims by Dormant Entities: Businesses not actively making taxable supplies (dormant) incorrectly claimed input tax.
- Lack of Supporting Documentation: Input tax claims were submitted without valid tax invoices, import permits addressed to the business, or simplified tax invoices as required.
- Claims on Disallowed Expenses: Businesses attempted to claim input tax on explicitly disallowed categories, including motor car expenses and medical expenses.
- Claims on Private/Personal Expenses: This includes expenses like family meals and, critically, expenses related to residential properties used for home-based businesses. IRAS explicitly stated: “Even if a GST-registered business is operating from home, it is not allowed to claim input tax on expenses related to housing expenses (such as utilities or maintenance fees) as they are considered personal in nature.”
- Unsubstantiated Zero-Rated Exports: Businesses failed to provide proper export documentation to support claims of zero-rating for exported goods.
This focused audit initiative underscores IRAS’s ongoing efforts to ensure compliance and accuracy in GST filings. The clarification on home-based business expenses is particularly significant given the prevalence of such operations. IRAS stresses that expenses deemed private or personal, regardless of where the business is physically conducted, are ineligible for input tax recovery.
Source: IRAS, 13 May 2025.