N.SELVAM CONSULT

From April 2015 to August 2018

If you have registered for GST Malaysia, you could have done more than 40 Tax Filing until August 2018.

Most likely, you would be using an Accounting Software accredited by JKDM. All accredited Accounting Software must generate GST03, GST Audit File (GAF) and TAP.

Typically, you would have printed the GST03 Tax Filing Form or generated schedules from your Accounting System or generated the TAP Import File & manually entered or uploaded your GST Values into the KASTAM TAP Portal & hope for the best.

You could be in a paying position or you could be in a refund position.

Did you check your GST03 values before doing your submission or you reported whatever values that was generated by your Accounting System.

I have done more than 300 GST Audit File (GAF) hand-on training and more than 50 GAF Audits on-site. The GST03 values generated from GAF did not agree with the GST03 values that was submitted and for some companies, the variation is significant.

There were 5 major reasons given for not checking the reported values before submission.

a. Insufficient time or lack of resources
b. Assumption that the reported values are good for submission
c. Lacking skills on how & where to check
d. Wrong advice given
e. Should be “safe” if you are in a paying position

6. Challenges experienced during my audit

a. No reconciliation done when GST03 values extracted from GAF did not agree with the GST03 Tax Filing Form generated by the Accounting System
b. GST03 values amended in the KASTAM TAP Portal without proper controls or authorization
c. Not reporting net realized forex gains and Interest received
d. Not charging GST for supply transactions
e. Not reporting purchases of Fixed Assets
f. Assigning incorrect Tax Codes for overseas purchase and supply transactions
g. Questionable exchanges rates for overseas purchase and supply transactions
h. Not accounting for reverse charge for imported services
i. Misuse of Tax Codes OP & OS (used as a dumping tax code)
j. Using self-created Tax Codes and GST03 Tax Mapping Table not available. e.g. Tax Code : DNC
k. Never reported OS in GST03 (required to report in Field 15)
l. GST% not equal to 6%
m. No GST Number and BRN Number in GAF for TX & SR Transaction reported in GST03
n. Non Registered Vendors reported as OP rather than NR
o. Transactions which are blocked (BL or TX-NC) are assigned Tax Code TX and reported in Field 6a/6b
p. Too many blank fields in the GST Audit File (possibly software issue)
q. Invoice date in GAF is not the actual date of the document
r. Back-posting of transactions after GST03 has been reported
s. K1 & K2 numbers not appearing in GAF
t. Differences in opinion to when to assign the K1 number
u. GAF is damaged and cannot be opened in Excel
v. GAF is in Excel Format (should be in TXT or XML format)
w. GAF can only be generated once
x. Blank “key” fields in GAF & cannot proceed with the audit (e.g. blank Tax Code)
y. GAF generated using 3rd party software and lines can be amended or deleted
z. The GAF is incomplete (cannot find all 5 record elements C,P,S,L,F)
aa. The values in F Record Element is incorrect
bb. Purchase Tax Codes appearing in S Record Element and Supply Tax Codes in P Record Element
cc. Cannot reconcile certain values in GAF with GL (e.g. GST Input)
dd. Failure to charge GST for inter-co transactions
ee. The GAF is a “nightmare”, possibly build by someone who has no idea what Malaysia GST is all about

GST Audit File (GAF) is not important

If someone tells you GAF is not important and can be safely ignored, get it in writing & send it to JKDM to “protect” your company

The GST Audit File is there for a good reason. It contains all your Accounting Transactions and in simple words “whatever you enter in your Accounting Software, the authorities will find it in GAF”. Therefore, it make perfect sense for KASTAM and Income Tax to use GAF for Audit. They don’t need to know how your Accounting Software works

The GST Audit File was mentioned many times during the MyGCAP Reviewers Course

You must remember you could have done more than 40 GST03 submissions and someone in your company has to take ownership when there is staff turnover. Likewise when you join a new company, you have to be responsible for the previous submissions given your position.

You challenge will start when the management asked you to verify the previous submissions or you cannot verify how the ex-staff obtained certain values or you receive a letter from KASTAM telling you they are coming in for an audit or asking for breakdown for specific fields in GST03.

You must remember:

Accounting staff will leave without doing any “proper handover”. Typically Excel Files used for reconciliation are never handed over.

Company can change Accounting Software but never generated or verified the GAF from the previous accounting software.

The GAF never “worked” from worked from Day 1 and all parties choose to keep quiet.

The programmer who developed the GAF resigned without fixing outstanding issues/bugs.

The Software Developer/Vendor who sold you the Software “close shop”.

You could join a new company & you have no idea how the Accounting System works and how they generated GST03 from Day 1. What would you do when you cannot verify any of the values in GST03. Would you leave the organization.

The company can use their own Tax Codes which are new to you & you do not have a GST03 Tax Mapping Table.

Make sure you can still generate GST03, GAF and TAP File for the historical periods.

Make sure your GST Tax Codes are not removed or replaced.

Make sure your accounting software can generate separate reports for GST & SST as you will still have GST Transactions for September 2018, possibly right up to December 2019.

You are expected to keep records for a minimum of 7 years. This also means the GAF will also stay for 7 years.

We will be conducting GAF hands-on training for July & August 2018 at subsidized rates (1 full day session @RM350/pax)

During this training, you will learn:

How to load the GST Audit File in Excel & naming conventions
a. The 5 Records Element in GAF and what they represent
b. Check if the GAF File complies with the requirements as per the GST Software Guide
c. How to check the integrity of the F Record Element
d. How to build the GST03 Mapping Table
e. How to generate GST03 from GAF using Pivot Table & Tax Code Mapping Table
f. How to generate Supply & Purchase Reports using different parameters (by Tax Code/Supplier/Customer/Country)
g. How to do exceptions reports (e.g., GST% <> 6%)
h. How to generate the Trial Balance and Ledger from the L Record Element as well as locate double entries
i. How to generate reports for multi-periods
j. How to build audit templates that you can re-use for different periods and different companies

Participants are encouraged to use their own GST Audit Files for this training (best to have at least 3 Reporting Periods). It would be to your advantage to working knowledge of Excel & Pivot Table for this hands-on training