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Exempt Covid-19 tests, hospitalisation charges from GST: Deloitte


ACCOUNTING firm Deloitte has called on the government to allow input tax claims for Covid-19 tests and Covid-19 hospitalisation charges for employees as administrative concessions to help businesses, especially those exposed to a higher risk of the pandemic, to minimise their goods and services tax (GST) compliance costs.

Taking issue with the Inland Revenue Authority of Singapore, which has clarified that GST incurred on such charges are not claimable, Deloitte said in a media release on Thursday: "Employees working in certain industries may be subject to higher risk/exposure to Covid-19 (frontline medical personnel, housekeeping personnel in hotels, construction workers who reside in dormitories) in the course of their work and hence are required to go for regular Covid-19 test and such testing costs are usually borne by the employers."

It added that the testing is usually mandatory and not specifically for the employees' personal benefits.

"Therefore, Deloitte proposes to consider allowing such input tax claims for Covid-19 testing costs as administrative concession so that GST taxpayers operating in these industries are not unfairly disadvantaged," the firm said in the release which highlighted Deloitte's wish-list for Budget 2021.

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Likewise for Covid-19 hospitalisation charges, if the employees have contracted Covid-19 in the course of carrying out their employment duties and that the employers are required to bear the employees' hospitalisation charges, it added.

"The fight against the Covid-19 pandemic is likely to be a long-drawn-out affair and this will send a clear message that the country is supportive of businesses that play their part in safeguarding against Covid-19 circulation," said Richard Mackender, Indirect Tax Leader at Deloitte Singapore. "Regular testing combined with immediate isolation and/or treatment will help to keep the Covid-19 situation stable until the majority of the adult population is vaccinated by the end of 2021."

Indicating that the Jobs Support Scheme (JSS) has been key in protecting jobs for Singaporeans, Deloitte proposes that the JSS be extended on a lowered scale for another six months after it expires in March 2021.

It said some specific sectors may take longer to recover and the extended JSS could take a more targeted approach for these sectors "to help them retain their core capabilities until the Covid-19 situation improves".

Said Liew Li Mei, a Deloitte Singapore tax partner: "While we understand that the level of support for JSS cannot continue indefinitely, extending the JSS to key industries, in particular the aerospace, aviation and tourism sectors, is crucial to minimise the long-term negative impact that could affect our economy as a whole."

These industries have been hit hard by the pandemic and needed help, she said, adding: "They are key sectors that have a multiplier effect on Singapore's overall economy."

The accounting firm pointed out that many firms are now looking to make working from home (WFH) a more permanent option but, while they have provided financial assistance, it said the additional spending incurred by employees working from home could be significant and would be recurring.

To provide greater support for the transition to WFM and to continue encouraging workers to embrace the "new norm of working", Deloitte recommends that an option be offered to employees "to claim standardised tax deductions on WFH expenses based on a fixed ratio/rate".

It could be a fixed percentage of gross employment income or fixed monetary amount multiplied by the number of WFH days, according to the firm.

Deloitte said if its recommendation is accepted, it would help lighten the administrative burden of having to justify claims of expenses currently allowed for incremental usage of electricity, telecommunication costs, etc as a result of the WFH arrangements.

Besides proposals it thinks would help Singapore build "an inclusive, cohesive and skilled society", the accounting firm's wish-list also includes suggestions on "strengthening and making use of Singapore's innovation and intellectual property ecosystem".

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