GST for medical bills: IRAS replies

WE THANK Mr Pang Kim Phong ("Why no subsidy for GST?"; May 23, and "GST computation not consistent"; last Wednesday) and Mr Christopher Leong Chi How ("GST levied on services supplied"; May 26, and "No inconsistency in GST computation"; last Thursday) for their letters on the goods and services tax (GST) computation for medical bills.

GST-registered organisations, including hospitals and clinics, have to charge GST on the value of their goods and services.

For government-funded public hospitals and polyclinics that are providing subsidised medical services, GST on these subsidised medical services is absorbed by the Government.

Therefore, subsidised patients in public hospitals and polyclinics do not pay any GST.

On the other hand, the GST on the goods and services provided by GST-registered private clinics is not absorbed by the Government.

Patients who are eligible for subsidies granted under government-funded healthcare schemes will receive subsidies that help defray their total medical bills at participating private clinics.

Yvonne Yim (Ms)
Manager
Corporate Communications
Inland Revenue Authority of Singapore (IRAS)
ST Forum, 3 Jun 2015

* GST charged on value of goods and services

WE THANK Mr Lo Chock Fei for his feedback ("Direct answers more helpful"; last Saturday).

GST-registered businesses have to charge goods and services tax on the value of their goods and services.

In the case of private clinics, the value of their services is the amount that they charge for the services.

The subsidies under government-funded healthcare schemes are given to individual patients to defray their medical bills, and do not change the value of the services provided by the clinics.

Therefore, the private dental clinic that Mr Pang Kim Phong visited correctly charged GST of $6.20 on the dental fee of $88.50 ("Why no subsidy for GST?"; May 23).

Mr Pang also mentioned that his tax invoice from Singapore General Hospital (SGH) showed that the GST was computed on $27.21, which was the amount payable after a government subsidy of $63.49 ("GST computation not consistent"; May 27).

Public hospitals and polyclinics receive government funding to provide medical services to eligible patients at a lower, subsidised price.

SGH was correct to have computed GST on the subsidised price of $27.21, as this was the value of its services.

Patients in public hospitals and polyclinics who are charged GST on the subsidised price do not pay any GST, as it is absorbed by the Government.

Yvonne Yim (Ms)
Manager
Corporate Communications
Inland Revenue Authority of Singapore
ST Forum, 10 Jun 2015

Direct answers more helpful

IN HIS letter ("Why no subsidy for GST?"; May 23), Mr Pang Kim Phong wanted to know if goods and services tax (GST) should be charged on his unsubsidised dental fee of $88.50 or on the net fee of $5 after deducting the government subsidy for Pioneer Generation cardholders.

But the Inland Revenue Authority of Singapore's (Iras) reply ("GST for medical bills: Iras replies"; Wednesday) leaves me no clearer as to what the correct GST amount should be.

Instead of merely making general policy statements which the public may have difficulty applying to their particular case, it would be more helpful if government agencies and other organisations addressed points raised more directly.

Lo Chock Fei
ST Forum, 6 Jun 2015

Why no subsidy for GST?

As a member of the pioneer generation, I am able to enjoy subsidised fees at dental clinics accredited by the Community Health Assist Scheme (CHAS).

I have also been able to stick to my regular dental clinic, which is part of the Healthway Medical Group, as it is Chas-accredited.

I was previously required to pay only a fee of $5 for scaling and polishing, which would normally cost $88.50.

However, on my recent visit, I was told that goods and services tax (GST) was being added to the fees, and that I would have to pay the GST on the full amount of $88.50.

Thus, I was invoiced for $5 in dental fees and $6.20 in GST.

Although this is still a substantial subsidy, I had always thought that one paid GST only on the final amount, and not on the unsubsidised portion.

It seems odd that the Government is willing to subsidise a large portion of the dental bill but not the GST.

Would the authorities care to comment on this?

Pang Kim Phong
ST Forum, 23 May 2015

GST levied on services supplied

MR PANG Kim Phong is incorrect when he says the goods and services tax (GST) should be levied only on what he paid for his highly subsidised dental treatment ("Why no subsidy for GST?"; last Saturday).

His dental treatment in a private clinic amounted to $88.50, plus $6.20 in GST. The state has generously given a subsidy of $83.50 for his treatment. He, therefore, had to pay a total of $11.20 for his private dental treatment.

GST is levied on the value of goods and services supplied and not on what you pay, as what you pay can be in cash, government subsidies, rebate vouchers, points redemption and so on.

To give a subsidy on GST will only further complicate the administration of the GST scheme for businesses, as can be seen in some countries which try to make all kinds of exceptions to their GST schemes.

The Singapore Government has, from time to time over the years, also given GST rebates to soften the regressive tax nature of GST.

Mr Pang had to pay only $11.20, and received $83.50 in state subsidy, which amounts to 89 per cent off his private dental treatment cost.

Christopher Leong Chi How
ST Forum, 26 May 2015

GST computation not consistent

I DISAGREE with Mr Christopher Leong Chi How ("GST levied on services supplied"; yesterday).

I have a tax invoice from Singapore General Hospital for $90.70, before subsidy.

After a government subsidy of $63.49, the amount payable was $27.21. The goods and services tax (GST) was then computed on the amount payable, working out to be $1.99, and not on the total amount or the value of goods and services supplied.

This GST was then waived, as is the case at government hospitals and polyclinics.

Could the authorities clarify whether GST is to be computed on the payable amount or on the total bill?

Pang Kim Phong
ST Forum, 27 May 2015

No inconsistency in GST computation

MR PANG Kim Phong's comments that goods and services tax (GST) computation is not consistent is not correct ("GST computation not consistent"; yesterday).

In his Singapore General Hospital (SGH) bill of $90.70, with a government subsidy of $63.49, the GST was computed based on $27.21 (net supply).

SGH's computation on GST is correct. SGH is state-owned, so the gross value supplied was $90.70 and the net value supplied was $27.21. Hence, GST was computed on the net value supplied of $27.21.

This is no different from a private enterprise which provides, for example, $100 gross value of services and gives the customer a $60 discount; the GST will be levied on the net value supplied, which is $40.

Mr Pang cannot compare the SGH bill with his bill from his private dentist ("Why no subsidy for GST?" last Saturday).

The government subsidy he received for his private dental treatment was not given by his dentist, so the gross and net value supplied by his private dentist was $88.50.

The waiver of GST at government hospitals and polyclinics forms part of the Government's overall subsidies for government-operated health services.

For the private healthcare sector, whether or not to waive the GST is up to the providers. If GST is waived, the private doctor, if he is GST-registered, must still pay the GST he did not collect from his patients, and the GST payments become part of the doctor's overall operating cost.

Christopher Leong Chi How
ST Forum, 28 May 2015