Hire Purchase GST: Goods, Credit and Invoice Flows

Key steps and distinctions

A hire-purchase financier makes a supply of goods even though legal ownership passes only after the final instalment or purchase option. GST on the total financed goods value is triggered by the earlier first-instalment invoice or payment, not progressively on each instalment. A separately charged and disclosed credit-finance element is an exempt financial service. The supplier invoices the hirer for the down-payment portion and the financier for the financed portion; the financier invoices the hirer for its goods supply. Where the hirer pays GST upfront to the supplier on the financier’s behalf, that payment flow must be distinguished from the supply and input-tax flows. The financier needs the supplier’s invoice, and the hirer needs invoices supporting supplies actually made to it. If the financier is not GST-registered, the hirer cannot claim the financed portion’s upfront GST merely because it paid it. After repossession, a debt-satisfaction sale is deemed made by the hirer. Where the hirer is GST-registered, the financier must charge tax, provide the prescribed statement to IRAS with copies to owner and buyer, and remit within 21 days of sale. Review financing documents before preparing invoices.