The Inland Revenue Authority of Singapore (IRAS) has published an updated e-Tax Guide - GST Guide on Attribution of Input Tax (Seventh Edition). The guide explains how a partially exempt business should attribute its input tax and also clarifies when input tax may be considered to be "directly attributable" to a supply.

In general, input tax is claimable if it is directly attributable to the making of taxable supplies. If a business makes both taxable and exempt supplies, they would not be allowed to claim input tax attributable to the exempt supplies made unless the de minimis rule is satisfied. The de minimis rule provides that a partially exempt person may claim all the input tax incurred including input tax incurred in the making of exempt supplies if the total value of all exempt supplies made is less than or equal to:

• An average of SGD 40,000 a month; and
• 5% of the total value of all taxable and exempt supplies made in that period.

A partially exempt business that does not satisfy the de minimis rule will have to claim input tax as follows:

• Input tax directly attributable to the making of taxable supplies will be claimable;
• Input tax directly attributable to exempt supplies is not claimable unless the exempt supplies fall within the list in Regulation 33 and that conditions in Regulation 35 can be satisfied; and
• Residual input tax to be apportioned by an apportionment formula.

For this purpose, taxpayers are encouraged to use the Partial Exemption Input Tax Recovery Calculator (xls file) to determine the amount of input tax claimable. The calculator file does not need to be submitted but must be maintained as part of a taxpayer's records.

The main change made in the latest version of the e-Tax Guide is the amendment of the frequently asked questions to clarify the rules for input tax claims on termination and non-termination expenses incurred while winding up a business.