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Industry Guide:

Trustee Services

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Time of Supply

1. Upon signing an agreement with a trustee, an institution has to pay a down payment of 30% of the consultancy fees for any services rendered by the trustee. When is the GST due for the prepayment of consultancy fees?

For the prepayment of consultancy fees, GST is due whichever occurs earlier i.e. the date the tax invoice is issued or the date when payment is received during the taxable period even though the trustee services are not rendered yet.

Inter company services 

2. As a trustee, I outsource to my subsidiary company to manage the investment activities of the fund. What is the GST treatment on the management services supplied by my subsidiary company? 

The subsidiary company will be required to charge GST on the management services at a standard rate to the fund.

3. My subsidiary company requires Information Technology (IT) support from my trustee company. What is the GST treatment on the IT services supplied by my trustee company?

Your trustee company is required to charge GST on the IT services. If the trustee company is member approved under GST group registration, the services rendered will be disregarded and no GST is due on the IT services supplied.

Trustee for common fund  

4. All monies received from an estate, trust or power of attorney forms part of the Public Trustee’s Common Fund. The Trustee charged management fees to this common fund for administering and managing the fund. Are the management and trustee fees charged to the common fund subject to GST?

Any management and trustee fee charged to the common is subject to GST.

Input Tax Credit 

5. As a trust, I incur GST on trustee services, management services and commissions. Can I claim input tax on the GST incurred?

No, you are not entitled to claim the GST incurred on the inputs. A trust is treated as a person different from the trustee. If the trust makes wholly taxable supplies e.g. rental of building then the trust can claim input tax on GST paid on inputs. However, if the trust makes wholly exempt supplies e.g. investment it is not entitled to claim any input tax credit.

Free Gifts and sponsorship to Clients 

6. A trust may provide free gifts to clients for opening up a trust account. What is the GST treatment on free gifts given to clients?

Free gifts given to clients are limited to RM500 per person per year and are not subject to GST. Gifts above RM500 are subject to GST at a standard rate.

7. A trustee company sponsor hampers for clients’ annual dinner or family day. What is the GST treatment on sponsorship of goods?   

Sponsorship of goods in kind bearing company’s logo on the goods is subject to GST at a standard rate. On the other hand, sponsorship in the form of money is not subject to GST. 

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