9.36 Asset input tax allowable to claim after registration

From the GST Guideline,

" Input tax on any asset held on hand can be claimed on the book value within 6 years from the date of registration irrespective of when the asset is acquired."

For example,

GST registered manufacturing company purchased machinery valued at Rm5,000,000 in June 2016 and pays GST amounting to Rm300,000.

The company is registered in April 2020. At the time of registration, the book value of the machinery is Rm500,000. The manufacturing company

being a wholly taxable supplier is eligible to claim input tax on the remaining Rm500,000 (i.e.Rm500,000 x 6% = Rm30,000).

How to enter into the system?

Suggestions:

A GST registered manufacturing company purchased machinery valued at Rm5,000,000 in June 2016 and pays GST amounting to Rm300,000.

Use Journal/Cash Book - Payment Voucher to post the below double entry:

DR Machinery Rm5,300,000

DR Bank Rm5,300,000

NOTE: GST amt pay in June 2016 = Rm 300,000 cannot be claim ....because the company is register GST at April 2020.

The company is registered in April 2020. At the time of registration, the book value of the machinery is RM500,000. The manufacturing company

being a wholly taxable supplier is eligible to claim input tax on the remaining RM500,000 (i.e.RM500,000 x 6% = RM30,000).

DR Machinery Rm500,000 (TX)

DR Input Tax Rm 30,000

CR Machinery Rm500,000

CR Other Income Rm 30,000 (OS)

Balance sheet as at April 2020, the machinery cost remains = RM5,300,000

GST-03 :

Item 6a = Rm500,000

Item 6b = Rm30,000

Item 16 capital goods acquired = Rm500,000