- Don’t issue “Advance” invoices before you have delivered the goods or rendered your services to your customer. Ask your accountant to hold and NOT issue any invoices out before 31 December 2023 to your customer if you are unsure whether your customer will receive the goods or your services before 31 December 2023. By doing this simple operational change to hold invoices before 31 December 2023 and issue them in 1 January 2024, you do not have to navigate the complexity of the GST transitional rule of determining the dates of payments, goods are delivered or services rendered and then worry about whether or not that you have issued your invoices at the right GST rate (8% or 9% or even 7%) and if invoices already been issued, what and how to do next. Just issue out all invoices at 9% from 1 January 2024 and avoid the GST transitional monster.*
- If your customers have paid you before you issue invoice, rendered your services or send your goods over, just check whether the money received is refundable in FULL back to customer as a security deposit (the amount received will not be used to offset against any amount that will be billed later). If this is a refundable security, then you should not charge GST as this is not a taxable supply. So there is no need to worry about GST transitional rule.
- If your customers have paid you before you issue invoice, rendered your services or send your good over for advance payment (eg retention deposit) that will be used to offset against an invoice that you will issue later, you will just charge at 8% (for amount received before 31 December 2023). Again, you do not need to understand the GST transitional rule monster.
*All invoices issued on or after 1 January 2024 must be charged at GST output tax rate of 9%. However, you (as a GST registered seller) are allowed to elect to charge at 8% if you satisfy any one of the following conditions:
a. Full payments from your customer is received on or before 31 December 2023 or
b. Your customer has received the goods or enjoyed the services on or before 31 December 2023.
In short, it is mandatory all invoices issued (dated) on or after 1 January 2024 be charged at 9%. The GST registered Seller can elect to charge at 9% or 8% (if one of the above conditions a or b is satisfied). The election to charge 9% or 8% (if fulfilled the conditions) for invoices issued on or after 1 January 2024 lies with the Seller NOT the Buyer.
