Question 2 AB Pte Ltd ("ABPL) is a Singapore incorporated company involved in the trading of alcohol-free wines and stouts (with alcohol content) and operation of a restaurant at Marine Bay Financial Centre. ABPL is registered for Goods and Services Tax (GST") and adopts a December 31 annual accounting date. For the quarter ended December 31, 2020, ABPL had the following transactions: 1 ABPL imported 400 bottles of premium alcohol-free wines and 200 bottles of stouts from a supplier in Australia. The goods arrived in Singapore on October 4, 2020 and the proforma invoice listed the following items: 500 bottles of alcohol-free wines US$30,000* 200 bottles of stouts US$25,000* Insurance US$4,000 Freight charges for shipping from Australia to Singapore US$2,500 Total US$61,500 *ABPL had paid a 10% down payment in August 2020 and this forms partial payment for the wines and stouts to be supplied. ABPL's in-house exchange rate for the month of October is US$1:$$1.38 and the use of in-house exchange rate was approved by IRAS. However, its finance executive noted from the Singapore Customs' website that its prevailing exchange rate on the date of importation is US$1:$1.35. In addition, S$580 of customs and excise duties were levied on the import of stouts. 2 In November 2020, groups of customers spent a total of $32,000 on food and drinks before a 10% service fee is levied. 3 On December 1, 2020, a regular customer bought 10 bottles of alcohol-free wines and requested ABPL to deliver them to an address in Johor Bahru, Malaysia before December 30, 2020. ABPL raised an invoice of $1,800 with the following breakdown: 10 bottles of wines ($160 x 10 units) $1,600 Delivery fee $200 ABPL engaged a transport service provider (who is not registered for GST) subsequently for $200 to transport the 10 bottles of alcohol-free wines to Johor Bahru and had obtained the relevant evidence of export. 4 ABPL provided accommodation benefits to its newly employed Australian chief chef with effect from November 1, 2020. It rented a fully furnished residential apartment from a GST registered investment holding company and a refundable security deposit of $7,600 was paid in October 2020. ABPL received monthly invoice at the beginning of each month for the rental of $3,800 with the following breakdown: a) Monthly rental of the (bare) residential unit* - $3,000 b) Monthly rental of the furniture and fitting - $800 (*this is in accordance with the annual value of the property) 5 ABPL purchases all its food ingredients from GST registered businesses. It purchases seafood from a GST registered seafood importer. Total purchases for November 2020 was $33,000 and an invoice dated November 30, 2020 from the supplier was received on December 1, 2020. 6 To entice prompt payment, ABPL was offered by the supplier (re: item 5 above) a 2% prompt payment discount if it makes full settlement within 14 days from the invoice date. ABPL settled the trade debt on December 12, 2020. 7 Customer DD placed order with ABPL to deliver 20 gift sets of Christmas goodies to its Singapore office on December 23, 2020. Each gift set costs $210 and ABPL raised invoice upon delivery. Customer DD gave each employee a gift set as Christmas gift. 8 To show appreciation of the support from customers, ABPL delivered 2 specially house-baked Christmas log cakes to each of its 10 major corporate clients in Singapore as Christmas gift. Each log cake has an open market value of $108. 9 To celebrate the season of giving, ABPL pledged to donate the proceeds from the sales of its house-baked Christmas cookies on December 18, 2020. Total cash collection for the sales of cookies for that day was $2,050 and ABPL donated $2,050 to Singapore Children's Society on December 28, 2020. 10 In September, ABPL arranged for renewal of the group medical and accident insurance coverage for its employees though it is not obligatory under Work Injury Compensation Act. The insurance underwriter is a GST registered business and raised invoice for the annual premium of $2,400 on October 2, 2020. 11 Reimbursed parking charges to the restaurant manager who used his personal "S" plated car for business purposes. The amount reimbursed was $321 (inclusive of GST). 12 ABPL staff accidentally broke a piece of decorative wall mirror at the common lift lobby area while carrying out his job duties. As per the compensation clause in the tenancy agreement with the landlord (a GST registered business), ABPL is liable to compensate the landlord for the damage to property. An invoice for a compensation of $15,000 was received on December 15, 2020. 13 ABPL recorded the following exchange differences in the 4th quarter of 2020: Exchange loss from the revaluation of AUD at bank at end of the year Realised exchange gain from the settlement of trade payable denominated in USD $390 $500 All amounts stated above are exclusive of applicable GST unless stated otherwise. Required: (a) Analyse the above and apply the GST rules to identify the type of transaction and value of supply for each item above. Implement common GST reliefs (if applicable) and compute the GST payable/refundable for the quarter ended December 31, 2020. You may use the format as provided below. All applicable input tax claimable and output tax to be presented in the table are to be rounded to 2 decimal places. Description Type of Value of Input tax Output tax transaction supply claimable (b) (42 marks) Apply the "Close Nexus Test and determine the GST position which you would have adopted if ABPL provides refreshments, lunches and/or dinners to all the service staff of the restaurant on their working days. (8 marks) Question 2 AB Pte Ltd ("ABPL) is a Singapore incorporated company involved in the trading of alcohol-free wines and stouts (with alcohol content) and operation of a restaurant at Marine Bay Financial Centre. ABPL is registered for Goods and Services Tax (GST") and adopts a December 31 annual accounting date. For the quarter ended December 31, 2020, ABPL had the following transactions: 1 ABPL imported 400 bottles of premium alcohol-free wines and 200 bottles of stouts from a supplier in Australia. The goods arrived in Singapore on October 4, 2020 and the proforma invoice listed the following items: 500 bottles of alcohol-free wines US$30,000* 200 bottles of stouts US$25,000* Insurance US$4,000 Freight charges for shipping from Australia to Singapore US$2,500 Total US$61,500 *ABPL had paid a 10% down payment in August 2020 and this forms partial payment for the wines and stouts to be supplied. ABPL's in-house exchange rate for the month of October is US$1:$$1.38 and the use of in-house exchange rate was approved by IRAS. However, its finance executive noted from the Singapore Customs' website that its prevailing exchange rate on the date of importation is US$1:$1.35. In addition, S$580 of customs and excise duties were levied on the import of stouts. 2 In November 2020, groups of customers spent a total of $32,000 on food and drinks before a 10% service fee is levied. 3 On December 1, 2020, a regular customer bought 10 bottles of alcohol-free wines and requested ABPL to deliver them to an address in Johor Bahru, Malaysia before December 30, 2020. ABPL raised an invoice of $1,800 with the following breakdown: 10 bottles of wines ($160 x 10 units) $1,600 Delivery fee $200 ABPL engaged a transport service provider (who is not registered for GST) subsequently for $200 to transport the 10 bottles of alcohol-free wines to Johor Bahru and had obtained the relevant evidence of export. 4 ABPL provided accommodation benefits to its newly employed Australian chief chef with effect from November 1, 2020. It rented a fully furnished residential apartment from a GST registered investment holding company and a refundable security deposit of $7,600 was paid in October 2020. ABPL received monthly invoice at the beginning of each month for the rental of $3,800 with the following breakdown: a) Monthly rental of the (bare) residential unit* - $3,000 b) Monthly rental of the furniture and fitting - $800 (*this is in accordance with the annual value of the property) 5 ABPL purchases all its food ingredients from GST registered businesses. It purchases seafood from a GST registered seafood importer. Total purchases for November 2020 was $33,000 and an invoice dated November 30, 2020 from the supplier was received on December 1, 2020. 6 To entice prompt payment, ABPL was offered by the supplier (re: item 5 above) a 2% prompt payment discount if it makes full settlement within 14 days from the invoice date. ABPL settled the trade debt on December 12, 2020. 7 Customer DD placed order with ABPL to deliver 20 gift sets of Christmas goodies to its Singapore office on December 23, 2020. Each gift set costs $210 and ABPL raised invoice upon delivery. Customer DD gave each employee a gift set as Christmas gift. 8 To show appreciation of the support from customers, ABPL delivered 2 specially house-baked Christmas log cakes to each of its 10 major corporate clients in Singapore as Christmas gift. Each log cake has an open market value of $108. 9 To celebrate the season of giving, ABPL pledged to donate the proceeds from the sales of its house-baked Christmas cookies on December 18, 2020. Total cash collection for the sales of cookies for that day was $2,050 and ABPL donated $2,050 to Singapore Children's Society on December 28, 2020. 10 In September, ABPL arranged for renewal of the group medical and accident insurance coverage for its employees though it is not obligatory under Work Injury Compensation Act. The insurance underwriter is a GST registered business and raised invoice for the annual premium of $2,400 on October 2, 2020. 11 Reimbursed parking charges to the restaurant manager who used his personal "S" plated car for business purposes. The amount reimbursed was $321 (inclusive of GST). 12 ABPL staff accidentally broke a piece of decorative wall mirror at the common lift lobby area while carrying out his job duties. As per the compensation clause in the tenancy agreement with the landlord (a GST registered business), ABPL is liable to compensate the landlord for the damage to property. An invoice for a compensation of $15,000 was received on December 15, 2020. 13 ABPL recorded the following exchange differences in the 4th quarter of 2020: Exchange loss from the revaluation of AUD at bank at end of the year Realised exchange gain from the settlement of trade payable denominated in USD $390 $500 All amounts stated above are exclusive of applicable GST unless stated otherwise. Required: (a) Analyse the above and apply the GST rules to identify the type of transaction and value of supply for each item above. Implement common GST reliefs (if applicable) and compute the GST payable/refundable for the quarter ended December 31, 2020. You may use the format as provided below. All applicable input tax claimable and output tax to be presented in the table are to be rounded to 2 decimal places. Description Type of Value of Input tax Output tax transaction supply claimable (b) (42 marks) Apply the "Close Nexus Test and determine the GST position which you would have adopted if ABPL provides refreshments, lunches and/or dinners to all the service staff of the restaurant on their working days. (8 marks)