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Thread: For Agent who do co-broke, collecting GST.

  1. #1
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    Default For Agent who do co-broke, collecting GST.

    Dear Mr

    I refer to your feedback sent via our website on 29 Oct 2015.

    To determine if the GST rate of 7% is to be computed based on 100% or 50% of the commission that you have to pay in a co-broking scenario where one agent is GST-registered while the other is not, you would need to look at which agent are you contracting with.

    A co-broking arrangement is commonly seen in the real estate agency industry where the estate agent enter into a co-brokering arrangement with another estate agent on the sale of property. Below is an illustration on how GST should be accounted for in a situation where one agent is GST-registered while the other is not.

    Illustration:

    A Realty Pte Ltd (GST-registered) is contracted by a seller to market his property. Separately, B Realty Pte Ltd (Non-GST-registered) assist A Realty Pte Ltd to find a buyer for the property and both estate agency agreed to share the commission equally. For the purpose of GST, there are 2 separate transactions in this case.

    (1) A Realty Pte Ltd’s supply of service to seller; and

    (2) B Realty Pte Ltd’s supply of service to A Realty Pte Ltd.

    In transaction 1, the full commission payable by the seller to A Realty Pte Ltd, (i.e. consideration for A Realty Pte Ltd’s supply of service) will be subject to GST. This is regardless of the co-broking arrangement which is a separate transaction between A Realty Pte Ltd and B Realty Pte Ltd. Separately, in transaction 2, no GST need to be accounted by B Realty Pte Ltd when it receives 50% of the commission from A Realty Pte Ltd as the former is not a GST-registered person.

    Hope the above clarifies.

    For future correspondence with us, please quote your email reference number.

    Regards

    LOW Wan Yeong, Mabel (Ms)
    Senior Tax Officer (GST-General) | Inland Revenue Authority of Singapore
    1800- 356 8633 | (65) 6351 3553 (fax) | http://www.iras.gov.sg | http://twitter.com/IRAS_SG

  2. #2
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    so basically GST should be 50%?
    “Nothing in the world is more dangerous than sincere ignorance and conscientious stupidity.”
    ― Martin Luther King, Jr.

    OUT WITH THE SHIT TRASH

    https://www.facebook.com/shutdowntrs

  3. #3
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    what happens if A realty who served seller is not GST registered ?

    the comm will be without GST.

    But when the cobroke agent (CA) who served the buyer collects 50% of the comm from A, whose company is GST registered..agent CA still needs to pay GST, even though his share does not incl GST.

    all in all ... it is a loss for agent CA as he will have to fork out the GST.

    IRA needs to clarify this part ..

    not fair to agent CA

  4. #4
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    Question should be, will owner get a GST agent or non GST agent.

  5. #5
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    if it is a lease and not a sale ... no difference ...

    landlord pays comm with GST ... and deduct from his rental income tax ...


    for sale ... well ...maybe not ...

  6. #6
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    If rental 4000 and GST 7% = 280.

    How much is deduct from his rental income tax from this 280. ????????

  7. #7
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    Is it compulsory for the agents to join the real estate company eg DWG, Huttons, ERA etc. If it is the case, buyers/sellers need to pay GST for the commission, right?

  8. #8
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    Interest topic.
    Wondering if there's any scenario like this...

    Owner/Seller X engage Agent Y to sell his flat.
    Agent Y managed to find a buyer buying at $500k.
    Assuming 2% comm, agent Y will receive $10k from seller X.
    From this $10k, agent Y will be override 10% by agency which leaves him with nett $9k comm earnings.

    Question: is it better for agent Y to have a undertable agreement and bypass agency and get the transaction done privately so agent Y can net 100% of the $10k comm and Seller X won't need to pay GST for the comm?
    Correct me if I'm wrong, there ain't a need to engage agent if you can sell the property to a direct buyer? And thus, it can also be a legal private agreement for seller to pay the agent for brokering the deal?

  9. #9
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    A illegal contract is not a valid contract.

  10. #10
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    Quote Originally Posted by Arcachon View Post
    If rental 4000 and GST 7% = 280.

    How much is deduct from his rental income tax from this 280. ????????


    so for a 2 yr lease, landlord pays comm of $4280...

    the whole amount can be deducted from his total rental income ..

  11. #11
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    why do we L L pay GST when shopping .... or even govt service ....

    yet when comes to paying gst to a service by an individual , we need to find ways to avoid paying ?

  12. #12
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    Quote Originally Posted by irisng View Post
    Is it compulsory for the agents to join the real estate company eg DWG, Huttons, ERA etc. If it is the case, buyers/sellers need to pay GST for the commission, right?


    no it is not compulsory for agents to join GST registered agencies...

  13. #13
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    Quote Originally Posted by proud owner View Post
    why do we L L pay GST when shopping .... or even govt service ....

    yet when comes to paying gst to a service by an individual , we need to find ways to avoid paying ?
    When you are shopping they add GST to the price they sell.

    For service, they don't add GST to the service but add after the service.

    Another things is some have some don't have GST, if everyone GST I don't see a problem.

    But if some have some don't have which one will you chose.

  14. #14
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    Quote Originally Posted by Arcachon View Post
    When you are shopping they add GST to the price they sell.

    For service, they don't add GST to the service but add after the service.

    Another things is some have some don't have GST, if everyone GST I don't see a problem.

    But if some have some don't have which one will you chose.

    choose the one that gives the best service ... not the one that dont charge GST

    i willingly tip if the service is good ...

  15. #15
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    Quote Originally Posted by proud owner View Post
    no it is not compulsory for agents to join GST registered agencies...
    GST is for IRAS to know how much profit and loss the company have so as to further Tax the company or self.

  16. #16
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    Quote Originally Posted by proud owner View Post
    choose the one that gives the best service ... not the one that dont charge GST

    i willingly tip if the service is good ...
    If Both also give the same service, than GST and non GST who will get it.

  17. #17
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    Dear Mr

    I refer to your email of 02 Nov 2015.
    As explained, there are 2 separate transactions in a co-broking scenario. Based on the illustration, A Realty Pte Ltd is engaged by seller to provide a service for an agreed consideration and as a GST-registered company, A Realty Pte Ltd is required to charge and account for GST on the agreed consideration (i.e. full commission due). The subsequent co-broking arrangement between A Realty Pte Ltd and B Realty Pte Ltd is to be treated independently and separate from the supply between A Realty Pte Ltd and the seller.

    Hope that clarifies.

    For future correspondence with us, please quote your email reference number.

    Regards

    LOW Wan Yeong, Mabel (Ms)
    Senior Tax Officer (GST-General) | Inland Revenue Authority of Singapore
    1800- 356 8633 | (65) 6351 3553 (fax) | http://www.iras.gov.sg | http://twitter.com/IRAS_SG

  18. #18
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    Quote Originally Posted by Arcachon View Post
    A illegal contract is not a valid contract.
    According to one of my agents, he said as long as the stamp duty is paid, it is considered as a legal contract. I think there are some agents who help the owner prepare the rental contract and get the stamp duty chop, the owner then pay him a small amount as a token without going through his company but if there is anything wrong with the tenant, the agent will not be responsible, the owner has to deal with all the problems himself.

  19. #19
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    Quote Originally Posted by irisng View Post
    According to one of my agents, he said as long as the stamp duty is paid, it is considered as a legal contract. I think there are some agents who help the owner prepare the rental contract and get the stamp duty chop, the owner then pay him a small amount as a token without going through his company but if there is anything wrong with the tenant, the agent will not be responsible, the owner has to deal with all the problems himself.
    This is not the contract I referring to, what I am referring to is the contract between the owner and the agent.

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