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$1.4 Billion Top-up to Assurance Package_ What You Need to Know

$1.4 Billion Top-up to Assurance Package: What You Need to Know

profileHui Juan Neo

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On 7 November 2022, the Singapore government announced that there will be an extra $1.4 billion top-up to the Assurance Package.

Source: Meme Generator

Yup, the main reason for the top-up is to combat the ongoing inflation and Goods and Services Tax (GST) increment that will take place from 1 January 2023.

This brings the entire Assurance Package to around $8 billion. This is a timeline of the revisions to the Assurance Package:

  • Budget 2020: $6 billion was set aside for the Assurance Package
  • Budget 2022: $640 million added to the Assurance Package

For the uninitiated, all Singaporeans who are 21 years old or older will receive cash payouts under the Assurance Package, which will start to be issued in December 2022 and last for the following five years.

As of 8 November 2022, these are the payout dates:

Assurance Package (AP) Scheme
AP ComponentHow Much Will I Get?Who Is Eligible?When Is The Payout Happening? (From)Has Payout Been Distributed?
AP Cash Payouts$100 - $200 in 2022

($700 - $1,600 over 5 years)
Adult Singaporeans aged >21

Owns 0 to 1 property
Dec 2022
First payout

(2022 - 2025)
No
AP GST Voucher – Cash (Seniors’ Bonus)$200 - $300 in 2023

($600 - $900 over 3 years)
Elderly Singaporeans aged >552023 - 2025Feb 2023
First payout

2023 - 2025
AP MediSave Top-ups$150 in 2023

($450 over 3 years)
Singaporeans aged 20 years and below + 55 years and above2023 - 2025Feb 2023
First payout

2023 - 2025
AP CDC Vouchers$200 in Jan 2023

$200 in 2024
All households with at least one SingaporeanJanuary 2023
First payout

2024
No

As for lower-income households, they will receive offsets covering about 10 years’ worth of GST expenses, to cushion the impact of the tax increase.

Note: This article will be updated in due time when the details of the enhancement are announced in Budget 2023.

If you’re wondering what other support packages have been rolled out, there was a $1.5 billion Support Package announced earlier in June 2022, to support healthcare, social and aging needs, and lower income.


Amendments to the GST Bill

The government intends to make some changes to the current GST bill to change the way GST is collected and administered.

If the Bill is passed, there will be changes to several industries, in particular, the travel and commercial industries.

Source: Giphy

1. GST Will Be Applied to Travel Arranging Services

Currently, GST is applied if the lodging is situated in Singapore and GST is not applicable if the lodging is located abroad.

However, the way that it is now handled does not accurately reflect where these travel planning services are used and consumed. Such services are used by Singaporeans at the point of booking rather than when they eventually use the underlying travel product.

To ensure there is a consistent tax treatment for travel arranging services (tour agencies for example), regardless of whether they are rendered by domestic or overseas providers, GST will be applied depending on whether the location of the person contracting the service is in Singapore, and where the person who directly benefits from the service belongs.

For instance, if the customer of the service belongs in Singapore, GST will be charged at the standard rate.

So, we can anticipate that traveling may become slightly more expensive in the near future with the incorporation of this tax application.

2. Prevent Double Taxation By Refining Rules on Taxing Low-value Goods and Imported Services

The proposed law will make it clear that overseas vendors do not have to collect GST from their Singaporean consumers when they purchase services from Singapore suppliers that have already been taxed.

This only applies if the overseas vendors are operating under the “pay-only” policy, in which case they do not submit any claims for the refund of the GST they paid on their purchases.

3. Criminal Sanctions to Counter “Missing Trader Fraud” Schemes

Very simply, this fraud scheme involves a merchant/seller who absconds the GST he has collected from his sales, and not paying it to the local tax authority, the Inland Revenue Authority of Singapore (IRAS).

This then leads businesses further down the fraud chain to continue claiming refunds from IRAS on the GST paid for their purchases.

The maximum penalties for these offenses include a 10-year prison sentence and a fine of S$500,000 for masterminds, accomplices, and members of syndicates, as well as a one-year prison sentence and a fine of up to S$50,000 for sole proprietors, partners, or directors of business entities involved in such fraud schemes.


GST Vouchers Will Continue To Be Given Out

The GST Vouchers comprise four components: cash, MediSave for seniors, USave rebates to offset utility bills, and rebates for service and conservancy charges bills.

In one of our articles, we’ve deep-dived into when and what GST Vouchers will be distributed:

 

 

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About Hui Juan Neo
A savvy shopper and foodie at heart, I'm always on a lookout for discounts and deals to snag the best bargains.
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