by Sherry Fox – March 11, 2010
Originally Published: February 27, 2009
Original article found here.

So, what is talent management, anyway?

When I think of talent, I think of musical and artistic talent: stage performers, actors, and singers. I think of Star Search, Canadian Idol,and America’s Got Talent.

When I think of talent management, I think of talent agencies and talent scouts. But talent management reaches far beyond Hollywood’s casting couch and the doors of Motown’s recording studios.

Talent management is the process of developing and retaining current employees, and of recruiting and attracting highly skilled workers for your business.

Talent management may also be referred to as human capital management (HCM), human resources information systems (HRIS), or human resources management systems (HRMS)—and it’s something that every growing business should know about.

While talent management emerged in the 1990s, the term was originally coined by McKinsey & Company in 1997. Since then, it has been adopted by scores of businesses looking to improve the processes of tracking and managing their employee talent.

Why Is Talent Management So Important?

One of the biggest challenges businesses face today in the area of human resources (HR) is the recruitment and retention of skilled talent. According to 2007 HR Trends Report: People to Profitability—answered by more than 500 executives of small and medium sized companies—talent management is the greatest business concern after revenue.

People are the most important resource in today’s global economy. And whether companies are willing to admit it, at the end of the day, it’s their people that are going to make the difference to their bottom line. To remain competitive in today’s job market, employers need to know about their employees—what they’re doing, what their skills are, how they’re progressing, and where they fit in the business’s future. As such, companies need to integrate talent management into their wider business strategy.

When it comes to managing talent, HR and talent managers definitely have their work cut out for them. In order to deliver results that will positively influence their organization, these managers must develop and implement an integrated talent management strategy or plan.

A successful talent management plan must flow seamlessly from strategy to practice, putting effective techniques into efficient practice.

What Are the Two Key Challenges?

1. Employee Recruitment and Retention

Recruiting and retaining the “best and brightest” requires more than just offering fringe benefits and signing bonuses. Managers must be ready and willing to help their current employees develop the skills that will prepare them for higher-level roles. The search for the best and the brightest can be a constant and costly battle, so companies need to find more imaginative ways to keep their best people.

Don’t lose the skilled talent your organization needs to your competition. Understanding which employees have the greatest value in particular business areas will enable you to create an effective workforce plan. Having a workforce plan will help determine whether you have the right type and number of employees with the right skills to meet the demands of your business.

2. The Global Workforce

Globalization has changed the face of business. While most organizations have adapted their operations to this new reality, too many are falling behind in developing HR strategies, policies, structures, and services that support their global operations. To create a truly global workforce, companies—especially organizations that operate on an international level—must incorporate a talent management strategy throughout their global environment.

In order to stay competitive and maintain an effective and stable workforce, organizations have to change their hiring, retention, and workforce management strategies throughout the global enterprise. This will help them to keep their candidate pipeline full for future growth.

To this end, a talent management strategy can be invaluable in developing a unified corporate philosophy for attracting and retaining much-needed talent across the globe.

What Systems Are Available to Help Manage Talent?

By now you have a better understanding of the importance of talent management. But even the best talent management strategy can’t stand alone; it requires the help of a system that can automate core HR functionalities while making crucial employee data easily accessible to the users who need it. In order to control costs and gain the most from the organization’s resources, the system must be able to bring key talent management and such HCM processes as performance management, workforce planning, skills management, succession planning, recruiting, and resource scheduling together into one unified solution.

Enter integrated talent management (ITM).

An ITM solution is comprised of several applications designed to help organizations improve their recruiting and hiring processes. These processes include performance management, succession planning, and workforce planning, and may include several other modules, depending on the solution. ITM can often be adapted to meet industry-specific challenges, such as those in the health care, education, or financial services fields.

ITM solutions are primarily delivered as hosted software—i.e, software-as-a-service (SaaS)—but they are also available as on-premise software.

Some of the benefits of ITM include the following:

• provides managers the tools they need to accomplish their recruitment and retention goals

• handles large-scale hiring and terminations

• integrates comprehensive employee data into one unified system

• identifies which employees qualify as successors for key positions

• enables the creation and management of a talent pool that is based on performance appraisals and career goals

Conclusion

Skilled and talented employees are hard to come by. Retaining the best people can also be a challenge—especially if you’re a small business competing against larger firms that can often offer better salary packages and fringe benefits.

But talent management is not just about finding the right candidate for the job. That individual must be nurtured and given ample opportunity to develop and grow with the company.

Conversely, companies that neglect to manage their talent effectively end up paying the price. And companies that tolerate employees who continually underperform—especially in the area of management—can pay the highest price of all.

A winning talent management strategy combined with a comprehensive talent management system will help ensure you have people with the right skills, in the right place, at the right time. It also ensures that you’re not letting your “star” performers get away. After all, your people are your most important asset. Letting them walk out the door is like shooting yourself in the corporate foot.

For more in-depth information on HR and talent management, please read P.J. Jakovljevic’s Thou Shalt Manage Human Capital Better. Or if you want a lighthearted read on the subject of HR, read my blog post Human Resources: No Laughing Matter.

Related posts:

1. Talent Management is a key component of the HR strategy
2. Human Resources: No Laughing Matter
3. The Crucial Difference Between Contact Management and CRM

I was reading the article ‘Human Resources: No Laughing Matter’ by Sherry Fox and came across a comment by Sherry Fox in response to a comment made in the article, which I found interesting.

Let me first say that I believe the relationship between the HR recruiters and the talent hunters/management of a company should be stronger than ever. Talent management is a key component of the HR strategy, so it is of the utmost importance that these two teams work together to achieve the common goal of developing talent that is aligned with the company’s strategic business needs. HR is often not aware of the technical skills required for particular positions within the company-especially IT positions. They know they have a position to fill and they know the high-level requirements they want in a candidate; but that doesn’t mean they always know the right “technical” questions to ask during the interview. It’s the talent manager’s job to hone people’s skills and it’s the technical personnel who understand what technical skills are required for IT-related positions, so more often than not these are the two parties that should be involved in the interview process.

HR managers should take advantage of the knowledge that talent professionals have and the expertise of their technical staff and use them to their advantage. For HR to hide their shortcoming—as you called it—doesn’t do anybody any good—including the HR manager himself/herself (in the long run).

I strongly suggest that HR should cooperate with the talent hunters and work together along with the technical personnel. Ideally, you should have all three professionals (HR, the technical heads, and the talent hunters) working together when recruiting technical personnel. By doing so, you have a better chance of finding the best-fit candidate for the job.

Related posts:

1. “Star Search” – Talent Management Made Simple
2. Human Resources: No Laughing Matter
3. The Crucial Difference Between Contact Management and CRM

by Sherry Fox, Research Analyst, Technology Evaluation Centers.

You can find the article here.

A little over 10 years ago, when I was working as an assistant manager in my former company’s payroll department—where many of the traditional human resources (HR) functions were handled by my staff—I often wondered, “well, if we’re doing all of this stuff, what are the people in HR doing?” I often joked with my fellow coworkers that it seemed (to me) that outside of handling employee paperwork and forwarding resumes to prospecting departments, all HR did was organize parties, baseball games, company BBQ’s, and hand out the occasional basket of “whatever” every time some poor sucker reached the five-, ten-, or 15-year mark of service. “Wow, what a great job,” I thought. “I’d like to do that and get paid for it!”

While this view of an HR department was from my personal experience, over the years I’ve had similar discussions with both colleagues and professionals from various departments and industries. Interestingly enough, I kept hearing the same thing over and over again. “What do people in HR really do anyway?” they would say. Some went as far as to complain that HR seemed to care more about protecting the company’s interests than about effectively handling employee concerns.

Well, being a few years older—and hopefully a tad bit wiser—I’m now a research analyst for Technology Evaluation Centers (TEC). In this position, I’ve spent a fair bit of time finding out exactly what HR’s roll within an organization is. To my amazement, it’s a lot more than one might think.

Human Resources: Then and Now

Up until fairly recently, HR had a very administrative function. It was mainly responsible for staffing and personnel-related issues, such as recruiting and hiring, establishing employment policies, handling pay and retirement plans, and administering benefits. HR personnel spent the better part of their days updating employee files, calculating employee statistics, processing applications, training employees, and terminating the ne’er-do-wells.

Today, HR is so much more. The very people my colleagues and I used to poke fun at are now helping their organizations transform HR from the low-priority function it once was into a strategic and vital part of the business.

So what’s fuelling this sudden transformation?

It’s the fact that company executives are now beginning to understand the critical link between their people and the bottom line. To remain competitive in today’s job market, companies are realizing that they need to know more about their employees—what they’re doing, what their skills are, how they’re progressing, and (more importantly) how they will fit into the future of the business.

Company and HR executives that continue to view HR as strictly a department of administrative service, and that fail to infuse HR functions throughout the organization, will surely end up limiting their strategic growth.

The Winds of Change

Gone are the days where people stay at a job for 20 years or more. Today, it’s simply unheard of! There are so many great opportunities for talented and skilled individuals out there that job seekers are beginning to take a much closer look at what’s in it for them. According to a recent survey conducted by Harris Interactive for CareerBuilder.ca, 33 percent of Canadian workers plan to leave their current positions within one year, and 48 percent expect to seek a new position within two years.

So what does that mean? It means that companies—and their HR executives—must pay heed…

People Are Paramount: Building Human Capital

Building human capital. Today, it’s all the rage—a buzzword that we hear often. But what does it really mean?

Building human capital is investing time, energy, and other resources into developing employee abilities, skills, and knowledge. Two of the main reasons HR executives must focus on building their companies’ human capital are

• the aging workforce, as baby boomers are retiring and the labor pool of skilled workers is shrinking fast
• fierce competition in the wake of globalization and the changing HR landscape

Employers need to focus their efforts on getting the best people in their doors in order to drive up their retention numbers. But the issue of retention should not be a priority for HR executives only; it should be a company-wide concern as well.

Employers in every industry need to respond to the changing face of the workplace, given the challenges they must meet to remain competitive internationally and to sustain a productive labor market.

That being said, company executives can no longer deny the fact that this is an area where HR can add more value—crafting corporate culture rather than processing paperwork and doing data entry.

Diversification Is Key

Somewhere, somehow, there are a few organizations getting it right. People are becoming such an important part of the big corporate picture that Canadian organizations are doing everything they can to recruit, train, and retain top talent. This includes incorporating diversity as part of their business strategy.

Diversity makes good business sense, especially for companies that generate revenue outside of the country. Hiring individuals from various backgrounds, who have a broad range of skills, and who know several languages, is a sound strategy for growth for any global business.

In a recent article published in the Montreal Gazette entitled “Embracing Diversity,” CanWest News Service columnist Derek Sankey highlights the importance of diversification in the workforce, and notes how more and more Canadian employers are recognizing the tight labor market and how they are making significant changes to the way they are hiring staff. Whether it’s related to gender, age, cultural background, or level of education, Canadian employers are tapping into all aspects of diversity. Hopefully this trend will encourage other companies across North America and beyond to adopt similar best practices.

Canadian companies recently competed to become part of the list that makes up the top 25 diversified employers in Canada. The competition aimed to recognize workplace diversity and inclusiveness initiatives, and competitors could either submit their own names or be nominated by third parties.

To see a list of Canada’s Top 25 Best Diversity Employers, go tohttp://www.canadastop100.com/diversity/

What Else Can Companies Do?

In order to stay competitive, companies must change their recruitment, retention, and workforce management strategies to maintain a supply of skilled personnel in a rapidly shrinking labor pool.

Some things that companies can do to significantly increase the efficiency and responsiveness of their HR department and improve the overall quality of HR management are

• offer flexible working hours
• provide workers with a competitive compensation package
• offer growth opportunities within the organization in order to retain top employees
• provide training and developmental opportunities, and gear training toward meeting the growing needs of the economy
• provide employees with Internet-based self-service access to their HR information (for example, address, dependants, benefits, payroll information, and education) and to incorporate HR information (such as job openings or training enrolment)

To better understand how you can drive up your company’s retention numbers, check out P.J. Jakovljevic’s five-part series “Thou Shalt Motivate and Reward Workforce Better,” including his article “Thou Shalt Manage Human Capital Better.” In this series, he discusses the importance of human capital management and how organizations can leverage technology to help them achieve their strategic goals.

HR—Moving Forward

HR staff is so much more now than the mere paper pushers they once were. They are on their way to becoming the backbone of their company’s corporate culture. And with the right executive support and the proper technology, HR departments worldwide can be the change.

So, for all of you sceptics out there (like I was 10 years ago), give your HR staff a break and the recognition they deserve—as often as you can.

One thing is for certain, they are no longer the butt of my jokes around the office.

Related posts:

1. “Star Search” – Talent Management Made Simple
2. Talent Management is a key component of the HR strategy

An interesting article from Technology Evaluation Centers. Original article can be found here.

Organizations are constantly looking for ways to maintain their competitive advantage and increase sales while lowering costs. Analytics helps organizations identify whether they are getting the most out of their resources. Is the money they spend going to good use? Are they proactively identifying ways to cut costs while maximizing resources?

Enterprise resource planning (ERP) solutions for manufacturers have analytics embedded within them. But do these systems actually give organizations the depth and breadth of analytics required to sustain a competitive advantage? Or is business intelligence (BI) for manufacturing the better solution?

In some cases, ERP analytics will be enough to meet an organization’s needs. But what about those organizations that aren’t lowering production costs, improving sales, or managing their supply chains effectively through the use of their current systems? In this case, BI for manufacturing may be the better way to meet and exceed an organization’s strategic goals. Let’s explore both options to help you determine which type of analytics is more beneficial to your organization.

Organizations using an ERP solution should ask themselves whether their ERP system helps them

• determine which customers are most profitable
• understand their company’s inventory worth
• track which items have remained in inventory for too long
• identify what products have the best margin growth
• recognize how company profits are developing

Organizations implementing an ERP solution need to have a continual view of the organization’s operational status, have access to business indicators that influence the organization, and have a visualization feature that provides management with constant access to business strategy. ERP analytics allows organizations to address these issues through financial, operations, and workforce-based analytics. But what does this really mean for the organization? Why are these analytics important as an enhancement for an ERP system?

Components of ERP Analytics

Aside from tracking order processing, getting products to the right place at the right time, and creating accurate sales forecasting, ERP analytics allow organizations to hone in on financial, operations, and workforce-based analytics to move beyond a traditional ERP solution and thus create and sustain a competitive advantage.

ERP analytics includes the following:

• Financial analytics, which help the organization develop business plans and budgets, and track performance during execution. Financial analytics includes financial and management reporting, planning, budgeting and forecasting, scorecards, working capital and cash flow management, and payment behavior analysis.
• Operations analytics, which help the organization optimize its supply chain, improve revenues, and increase customer satisfaction.
• Workforce analytics, which help the organization understand workforce trends, measure workforce processes and benchmark results against what is happening in the market, align business activities with the strategic goals of the organization, and measure the success of employee compensation programs.

How BI Differs

Organizations that want to move beyond the limited scope of ERP analytics and manage performance on an organization-wide level should consider a BI solution. This will help them move toward an inclusive approach to setting metrics, collaborating on tasks, and tying initiatives to the organization’s overall goals. By focusing on organization-wide business issues, a more cohesive view of the organization is created.

For manufacturers, the added value of implementing a BI solution includes

• Increase in profitability
  • Gain visibility into demand and sales trends to minimize inventory investment.
  • Analyze cost components and drivers to reduce the cost of goods sold.
• Improvement in sales performance
  • Analyze sales trends and customer buying behavior.
  • Monitor key sales, marketing, and revenue metrics.
  • Analyze pipeline and performance by brand, product, customer, channel, and geography.
• Improvement of operational effectiveness
  • Monitor key operational metrics.
  • Identify and analyze excess, obsolete, or slow-moving inventory that can be scrapped or repurposed.
  • Receive timely notification of events, such as late supplier delivery, changes in customer demand, or production stoppages.
• Optimization of the supply chain
  • Evaluate supplier performance in terms of quality, delivery, and price.
  • Monitor and analyze freight costs.

Conclusion

Manufacturers need to identify which approach works best for them. Do built-in ERP analytics meet business requirements and help manage organizational performance, or should manufacturers take advantage of the additional benefits of a full BI solution? Organizations may be using their current set of ERP analytics, and it may provide sufficient benefit to the organization.

Click here for your free custom comparison of ERP solutions.

If not, BI solutions can create an organization-wide approach to managing performance and gaining competitive advantage that goes beyond ERP analytics.

Click here for your free custom comparison of BI solutions.

Related posts:

1. Business Intelligence: 5 things to watch for in 2010
2. Challenges of an ERP Implementation in SME Segment
3. The Crucial Difference Between Contact Management and CRM

by Michael E. Dortch | December 15, 2009

Introduction

BI (business intelligence) solutions will continue to multiply in 2010. Smaller, newer vendors will merge with or be acquired by larger software companies. And users will continue to try to figure out how best to leverage BI to turn their organization into truly intelligent, agile and more effective businesses. Below are some specific areas of focus and recommendations intended to help those users to achieve their goals.

Analysis

1. BI will become more pervasive and more visible – and more invisible.

CRM, SFA and other applications focused on sales, service and support will increasingly act as “feeders” into core BI applications and functions. This increasing integration offers the prospect more complete and comprehensive views of business operations, in part by hiding BI functions behind other applications and interfaces familiar to users.

What you should do: Ensure that all of your current and potential solutions for CRM, SFA, help-desk management,
contact-center management and other business-critical functions can “talk” to your BI solutions and processes. Also,
work to drive adoption of those “feeder” applications to as close to 100 percent as possible. This will help to ensure that, to paraphrase a recent U.S. president, no BI information is left behind.

2. BI functions will increasingly “live in the cloud(s).”

As more collaboration, CRM and sales/marketing automation functionality is delivered as cloud-based services, BI functions will follow suit. This should give you more options for expanding the reach and adoption of BI and related applications, in many cases more affordably and with lower management overhead than possible with previous alternatives.

What you should do: If you’re already using cloud-based solutions for CRM, SFA or related functions, work with your vendor(s) and/or reseller(s) to make sure those solutions interoperate with incumbent or planned BI solutions. If your organization is not yet in the cloud, educate yourself and your colleagues about what’s available; what works with what; and what makes the most sense given your organization’s specific needs, goals and resources.

3. BI and business collaboration will grow closer.

During 2010, numerous innovative collaboration-centric solutions will likely appear, built upon platforms such as
Google’s Wave, Salesforce.com’s Chatter and SAP’s 12 Sprints/“Constellation” project, now in beta testing. SAP’s
alternative is particularly interesting, given the company’s long leadership in ERP and BI. Also, early reports indicate that SAP plans at least some integration with Google Wave, and to support real-time collaboration with information aggregated from multiple sources, presumably including those within and outside of an organization. Given SAP’s legacy, the company will likely enable users to employ a hybrid approach combining cloud- and premises-based resources. All of these emerging platforms offer the promise of enhancing real-time collaboration with real-time and near-real-time BI and business analytics.

What you should do: Keep an eye on developments related to these and other such platforms. Pay specific attention to how and whether the providers of your most business-critical applications adopt and/or respond to those developments. And make sure those responsible for those business-critical applications at your organization sign up for access to the emerging platforms, so your organization has as much practical information as possible about potential specific BI-collaboration integrations.

4. BI will gain a larger “voice.”

The growing use of IP telephony creates new opportunities to gather and leverage information about who calls whom and what happens before, during and after each call. This information can be a very valuable addition to BI and analytics efforts – but only if a company’s phone system and that system’s vendor, reseller and/or integrator are sufficiently strategically focused on the company’s business needs and goals.

What you should do: Take a strategic approach to VoIP, and make sure that your chosen and candidate solutions – and their vendors – understand your business needs and goals. You want to make absolutely sure that all relevant information about voice traffic at your organization is as accessible to your BI- and analytics-related solutions and efforts as is information about e-mail and other data.

5. BI will continue to challenge business decision makers to take full advantage of its benefits.

While growing numbers of companies will achieve success with BI in 2010, many will find their efforts stymied. Impediments will include disjoint solutions, inconsistent integrations with other key applications and information sources, lack of complete solution adoption, lack of managerial support or some combination of these factors.

What you should do: Stay the course and remain focused on your business goals. Evangelize the business value of effective, comprehensive, enterprise-wide BI and analytics to all key constituencies at your organization, from senior management to sales and support teams. Strive to focus on solutions and vendors that support and encourage interoperability, ease of use and management, and effective integration. And keep at least one eye on technological and business developments among BI solution providers.

Conclusion

Business intelligence efforts can only result in a truly intelligent, agile business if they are driven by business goals; comprehensively deployed and adopted; and managed in ways that produce meaningful, measurable and credible results.
The trends and recommendations above can provide a foundation upon which you can build an effective approach to BI
tailored to your organization’s unique needs and goals. In addition, resources such as Focus can help you to get and keep
informed and up to date on relevant industry developments, the experiences of other users and advice from experts.

Download the whitepaper here

Related posts:

1. ERP Analytics vs BI for Manufacturing: Which is right for your organization?
2. Challenges of an ERP Implementation in SME Segment
3. “Star Search” – Talent Management Made Simple

There are certain procedures involved in running periodic processing in Sage Accpac ERP.  Download the following checklists (in pdf format):

• Day-end processing
• Period-end processing
• Year-end processing

Related posts:

1. Is Sage Accpac ERP ready for Windows 7?
2. Choosing the right edition of Sage Accpac ERP
3. Sage Accpac Accounting Entries

Microsoft Windows 7 is here, but is Sage Accpac ERP ready for it?

Sage Accpac ERP version 5.6, 5.5 and 5.4 (current version and 2 prior versions) will be supported on Microsoft Windows 7 upon the general availability of Sage Accpac ERP version 5.6. Windows 7 support will be limited for certain configurations in the Extended Enterprise suite and some 3rd party software component that integrate with Sage Accpac ERP due to timing of product release and legacy issues.

Sage Accpac ERP v5.5 and 5.6 will be supported on Windows Server 2008 R2 (32-bit and 64-bit)

Crystal Runtime XI R2 (the embedded Crystal Report engine within Sage Accpac ERP) has been tested to be compatible with Windows 7 but will only have limited supported by Sage and SAP/Business Objects.

Crystal Reports 2008 will only be supported on Windows 7 with CR 2008 Service Pack 2 (available through CR 2008 update or from Sage Accpac Technical Center)

Pervasive SQL Database Engine will have support for Windows 7 with the full release of Pervasive SQL 10.3.

SageCRM v6.2e will have support for Windows 7 as a client workstation only. SageCRM v7 will have full support for Windows 7.

Sage Accpac ERP v5.6 is now supported in a VMWare ESX environment. Do take note that performance issues in a VMWare environment will not be addressed, only application-related issues that can be replicated in a physical environment will be addressed. Non-VMWare environments such as Microsoft Hyper-V, Citrix XenServer, however is not supported. SageCRM is not supported in any virtual environment.

Download the Sage Accpac ERP v5.6 Compatibility Guide here (pdf format)

Related posts:

1. Choosing the right edition of Sage Accpac ERP
2. Things to do before calling for support
3. Comparison between different editions of MS SQL

• Accounting for GST (continued)

Manufacturer’s Warranty

It is quite normally for the selling price of goods to include:

• A charge for after-sale service and repairs
• Any replacement of spare parts without charge (FOC) during the warranty period

Services and replacement of parts which are not charged (that is FOC, Free of charge) are not subject to GST.

Approved Schemes

Below are some of the approved schemes for GST:

• Approved Trader Scheme
• Approved Toll Manufacturer Scheme
• Approved Jeweler Scheme

Approved Trader Scheme

Generally all goods imported by manufacturers are subject to GST. Under an Approved Trader Scheme (ATS):

• An ATS participant is allowed to defer GST on the importation of goods.
• GST due on all goods imported in a particular month would be accounted for in the following month.
• GST due will be offset against the related input tax credits in the same GST return.
• GST due and input tax claims is just an accounting entry that nets off to zero.

The following persons or businesses are eligible to apply for ATS:

• Companies located within FTZ and LMW
• IPC / RDC
• Contract manufacturers under ATMS
• Jewelry manufacturers under AJS
• Companies with turnovers above RM20 million and with at least 80% of the supplies made are zero-rated

The approval for participant under ATS is subjected to the following criteria:

• Participants must make wholly taxable supply
• Goods imported in the furtherance of a business
• Participants must submit monthly GST return
• Participants must have good accounting system

Approved Toll Manufacturer Scheme

1. Toll manufacturer (TM) imports consigned goods from the overseas principal.
2. TM drop ships the finished goods to the local customer of the overseas principal.
3. The overseas principal invoices the local customer on the finished goods received from TM.
4. TM invoices the overseas principal for the value-added activities.

The supply of value added activities made by the toll manufacturer (TM) for the overseas principal (that is processing charges / toll) is to be disregarded. The delivery of the processed goods (finished goods) by the TM (for his overseas principal)  to a local customer (GST registrant or non-GST registrant) will be accounted by way of “Recipient Accounting”:

• If local customer is a GST registrant – normal GST return
• if local customer is a non-GST registrant – a special form is required

Local supplies made to the TM under the account of the overseas principal will be treated as zero-rated supplies.

The following persons are eligible to apply for Approved Toll Manufacturer Scheme (ATMS):

• Any TM who has contract(s) with overseas principal(s) to carry out value added activities worth RM2 million or more (excluding the cost of raw materials supplied or belonging to the overseas principal) per annum
• 80% of the processed goods must be exported

The following are the conditions required to apply for ATMS:

• The TM must perform value added activities that are related to manufacturing, treatment processing, finishing, assembling and other manufacturing-related works on the consigned goods
• The transactions must involve value added activities on goods consigned from overseas

Related posts:

1. Introduction to GST – Part 7
2. Introduction to GST – Part 4
3. Introduction to GST – Part 5

• Accounting for GST (continued)

Bad Debt

Bad Debt is defined as the outstanding amount of the payment in respect of the taxable supplies including GST which is due to the person but has not been paid to and is irrecoverable by the person.

The following are the conditions to apply for refund:

• GST has been paid to the government
• The taxable person has not received any payment six (6) months from the date of supply or
• The debtor has become insolvent before the period of six months has elapsed
• Sufficient efforts have been made to recover the debt

Goods Lost / Destroyed

Goods lost while under the control of the Customs authorities:

• Goods lost are subject to GST
• The taxable person may apply for remission from the Director-General of the Customs authorities

Goods lost during delivery:

• Generally not subject to GST if supply has not taken place
• However, if the contract makes either parties (buyer or seller) liable for the loss, the GST liability would depend on the contract between the buyer and the seller.

Out of Scope Transactions

The following transactions are considered Out of Scope:

• Issuance of licences
• Security deposit
• Royalty
• Premium
• CESS

So are collection services and enforcement functions:

• Penalty / surcharges or fines paid
• Royalty marking and assessment

Outsourced services

Outsourced services are considered taxable supplies and are standard-rated supplies.

Exports by Marketing Agents

It depends on the contractual agreement between the principal and agency relationship. If the contract involves the transfer of ownership (there is a sale) from trader to agent, then it is a standard-rated supply which:

• The trader must account for GST
• Subsequent export by agent is considered a zero-rated supply

If there is no transfer of ownership (there is no sale) that is agency merely acts on behalf of the trader, then only the agency fee is considered a standard-rated supply.

Sub-contractors

There are basically two types of sub-contractors:

• Domestic / Internal sub-contractors
  If it does not involve  transfer of ownership of goods to the sub-contractor, (that is, it is not a supply of goods), the taxable person does not have to account for GST (output tax) on the new materials.
  If the sub-contractor is a GST registrant, he has to account for GST (output tax) on the value of the service supplied to the owner.

• International / External sub-contractors (Outside Malaysia)
  If the goods are returned after the value added activities (labour charges only), then no GST is due.
  If the value added activities involve the addition of new parts, then GST will be imposed only on the additional parts.
  (Item 51 of the Customs Duties – Exemption Order)

Related posts:

1. Introduction to GST – Part 2
2. Introduction to GST – Part 6
3. Introduction to GST – Part 3

• Accounting for GST (continued)

Input Tax Claim

The following are the prerequisite for Input Tax Claim:

• The claimant must be a taxable person
• The goods and services are acquired for the purpose of making taxable supply
• The claimant must have a valid tax invoice
• The tax invoice is issued under the name of the claimant
• The goods and services acquired are not subject to any input tax restriction (for example, motorcars)

Mechanism for Input Tax Claim

The following are the mechanism for Input Tax Claim:

• The tax paid on inputs can be offset against the output tax in the relevant taxable period subject to a time limit of 6 years from the date of return required to be made
• Apportionment rules has to be applied when the taxable person makes a mixed supply
• Any refund of input tax may be offset against other unpaid GST, customs and excise duties
• The input tax will be refunded within 14 days for on-line submission and 28 working days for manual submission

Blocked Input Tax

The following are goods and services which have blocked input tax:

• The supply to or importation of passenger motor car
• Club subscription fees
• Medical and personal accident insurance premium
• Medical expenses
• Family benefits
• Entertainment expenses

No GST will be imposed on the subsequent supply of the above items.

Incidental Financial Supplies

The following exempt supplies are regarded  as taxable supplies for those who are making wholly taxable supplies:

• Deposit of money
• Exchange of currency
• Issuance of equity security or debt security
• Provision of loan, advance or credit to employees or connected person

Fringe Benefits

• Fringe benefits include any right, privilege, service or facility provided free of charge to employees
• All goods or services provided free to employees  are subject to GST except those exempted, blocked input tax and zero-rated goods
• The value of the fringe benefits given, will be based on open market value.
• Exception: if value of goods is less than RM500

De Minimis Limit

Exempt input tax can be recovered in full if the total value (directly attributable plus the exempt proportion of any residual input tax) is less than the prescribed amount. The prescribed amount of the De Minimis Limit is the total value of the exempt supplies which does not exceed:

• An average of RM5,000 per month and
• Not exceeding 5% of the total value of the total supplies (all taxable and exempt supplies) made in that period

Related posts:

1. Introduction to GST – Part 2
2. Introduction to GST – Part 3
3. Introduction to GST – Part 5