Starting from 1 January 2023, the GST rate will increase to 8%. For those of us with big-ticket purchases to make, it may be worth pulling the trigger now and saving on that 1% GST increase. Yet not every purchase or booking will qualify for the 7% GST rate even if we choose to buy now.
Here’s why you may be still paying 8% GST even if you make your big-ticket purchase now.
Read More: 9 Big-Ticket Items To Buy In 2022 Before The GST Increase Next Year
Wedding Banquets: Deposits Will Be Charged At 7% If Paid Before 1 January 2023
If you are booking a wedding banquet in 2023, the deposit you pay in 2022 would be charged at 7% while the remaining payment will be charged at 8% in 2023.
For example, you book a wedding banquet on 2 June 2023 for $20,000 (excluding GST), and you pay your deposit ($2,000 excluding GST) on 20 December 2022. This deposit will be charged at 7% GST ($140).
Assuming you pay the remainder on 2 June 2023, the remaining payment of $18,000 will be charged at 8% ($1,440). The total GST paid will be $1,580.
However, if you delay payment and only pay the deposit on 3 January 2023, the wedding banquet vendor will have to reissue you a new tax invoice and charge you 8% GST ($180) for the deposit as the deposit was only paid after 1 January 2023. This means that you would be paying 8% GST for the full cost of the wedding banquet ($1,600).
It is possible to save on GST for the full cost of the wedding banquet. If you make the full payment for the wedding banquet before 1 January 2023, the wedding banquet vendor can only charge you 7% GST. This will mean paying only $1,400 for GST, instead of $1,580.
Likewise, the same applies to deposits for other packages (i.e. hotel packages, spa packages, renovation packages). Payments paid before 1 January 2023 will be charged at 7% even if the packages are used/ consumed on/ after 1 January 2023.
Read Also: 5 Unique Wedding Venues In Singapore That Will Not Burn A Hole In Your Wallet
Renovations: Additional Works Performed May Be Charged At 8% GST After 1 January 2023
Similar to wedding banquets, deposits or payments made before 1 January 2023 will be charged at 7% GST while payments made after 1 January 2023 will be charged at 8%.
However, you may find yourself in a situation whereby you have additional works that are outside of the original scope of work and thus not covered by the original tax invoice and deposit. In this case, the additional works performed after 1 January 2023 will incur 8% GST.
If the additional works are performed before 1 January 2023 but invoiced on/ after 1 January 2023, your contractor can elect to charge 7% GST for works performed before 1 January 2023, under the transitional rules.
Read Also: How Much Does It Cost To Renovate My HDB BTO Flat?
Services: Advance Bookings Will Be Invoiced At 7% GST But Charged At The Prevailing GST At The Time Of Payment
Perhaps you may think that making advance bookings for services will be a good way to save on GST. Unfortunately, that is not the case.
This is because vendors are only allowed to charge 7% GST if the tax invoice is issued before 1 January 2023.
For example, you make a booking for spring cleaning next year (15 January 2023) now. The vendor issues a tax invoice for 7% GST on 12 December 2022. The cleaning service is performed on 15 December and payment is made on the day of service. 8% GST will apply as both the service and payment is made after 1 January 2023. A new tax invoice reflecting the 8% GST should be issued to you.
If you want to enjoy the GST savings of 1%, you will have to make payment before 1 January 2023.
Read Also: How Much Does It Cost To Hire Part-Time Cleaners In Singapore?
Instalment Plans May Be Charged At 7% GST If Goods Are Delivered Before 1 January 2023
Some of us may choose to use instalment plans for our big-ticket purchases. In this case, the delivery date is important.
If the goods (i.e. refrigerator) are delivered to you before 1 January 2023, you will only have to pay 7% GST on all instalment payments. However, if the goods are delivered after 1 January 2023, only the instalment payments made before 1 January 2023 are charged at 7% GST. You will have to pay 8% GST for the subsequent instalment payments on or after 1 January 2023.
Read Also: Assurance Package For GST: How Much Will Singaporean Households Be Getting Over The Next 5 Years?
Goods From Overseas May Incur 8% GST If They Are Imported On/ After 1 January 2023
For those of us thinking that we are saving by buying our overseas goods during the 12.12 sales, we may still be caught by the 8% GST.
This is because GST is charged at 8% for goods over $400 imported on/after 1 January 2023. This means even if we have made full payment before 1 January, we will still have to pay 8% GST to Singapore Customs for the goods imported on/ after 1 January.
Aside from the 8% GST increase, we should also take note that overseas goods at and below $400 will be subject to GST from 1 January 2023. Thankfully, if we buy these low-value goods before 1 January 2023, they will not be subject to 8% GST even if they are imported after 1 January.
Prepayment Can Save Us Money But It Can Also Cost Us
As elaborated above, making payment before the 8% GST rate change on 1 January 2023 can help us save on the 1% GST increase. However, there are downsides to making payments way in advance. For example, there’s no guarantee that the vendor will still be in business or that there will not be disputes. In these unfortunate cases, your prepayment will leave you little negotiation power.
However, if you are confident of your vendor or your original payment date is just a few days after the GST rate increase, consider making your payment before 1 January and save on that 1% GST.
Read Also: 7 Ways To Protect Yourself From Errant Interior Design Companies During Your Home Renovations
The post From Wedding Banquets To Renovation Works: Why You Would Be Still Paying 8% GST Even If You Book Now? appeared first on DollarsAndSense.sg.
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