Most GST-registered businesses account for GST on an invoice basis: you must declare and pay the GST on a sale as soon as you issue the invoice, even if the customer has not yet paid you. For a small business that gives customers 30, 60 or 90 days to settle, that can mean handing GST to the tax authority long before the cash arrives. The Cash Accounting Scheme is designed to fix exactly that timing mismatch for smaller businesses. This 2026 guide explains what the scheme is, who qualifies, how it works, and its pros and cons.
It is written for owners of small GST-registered businesses and their bookkeepers. If late-paying customers regularly leave you funding GST out of your own pocket, the Cash Accounting Scheme is worth understanding.
What is the Cash Accounting Scheme?
Under the ordinary invoice basis, output GST is accounted for by reference to the tax point, usually the earlier of when an invoice is issued or payment is received. This means you can owe IRAS the GST on a sale before your customer has paid you. The Cash Accounting Scheme changes the trigger: you account for output GST only when you receive payment from your customer, and you claim input GST only when you pay your suppliers.
In other words, GST follows the cash. You do not pay output GST on a sale until the money is in, and you do not claim input GST on a purchase until you have actually paid for it. For a business that is regularly waiting on customers, this aligns the GST cash flow with reality.
Who can use the scheme?
The Cash Accounting Scheme is aimed at smaller GST-registered businesses. The central condition is a turnover threshold: your annual taxable turnover must not exceed S$1 million. The scheme is optional, so eligible businesses choose whether to adopt it, and IRAS expects applicants to have a good compliance record and to meet the scheme’s conditions.
If your turnover is comfortably above S$1 million, the Cash Accounting Scheme is not for you, and you would look instead at whether other reliefs, such as the Major Exporter Scheme or the Import GST Deferment Scheme, fit your trade profile. Those schemes address import GST timing rather than the sales-versus-payment mismatch that the Cash Accounting Scheme targets.
How it works in practice
The mechanics are best seen with a simple example. Suppose you make a S$10,000 sale (plus 9% GST of S$900) in March and invoice the customer, who pays you in June.
Under the ordinary invoice basis, you would declare the S$900 output GST in your March-quarter GST F5 return and pay it to IRAS, even though the customer only pays you in June. Under the Cash Accounting Scheme, you declare the S$900 in the return covering June, when you actually receive payment. The same logic applies to your purchases: you claim input GST when you pay your supplier, not when they invoice you.
The result is that your GST payments broadly track your cash position, which is exactly what a cash-tight small business needs.
Advantages
The principal benefit is cash flow. You are never in the position of paying GST on a sale before you have been paid, which is a real risk for small businesses with slow-paying customers or a high rate of bad debts. It also offers a form of bad-debt protection: if a customer never pays, you never accounted for the output GST in the first place, so you do not have to chase a separate bad-debt relief claim to recover GST you already handed over.
Disadvantages and cautions
The scheme is not automatically better for everyone. There are trade-offs to weigh.
First, you also defer your input-tax claims: you cannot claim input GST until you have paid your suppliers, so a business that pays suppliers slowly but collects from customers quickly could actually be worse off. Second, the scheme requires disciplined record-keeping of payment dates, not just invoice dates, which adds bookkeeping work. Third, there are rules on entering and leaving the scheme, and transitional adjustments to make, so switching should not be done casually. As with any GST election, it pays to model your own numbers before opting in.
Frequently asked questions
What is the turnover limit for the Cash Accounting Scheme?
Your annual taxable turnover must not exceed S$1 million. The scheme is intended for smaller GST-registered businesses.
Do I account for GST on invoices or on payments?
On payments. Output GST is accounted for when you receive payment, and input GST is claimed when you pay your suppliers.
Is the scheme always beneficial?
No. If you collect from customers quickly but pay suppliers slowly, deferring your input-tax claims could leave you worse off. Model your own payment patterns first.
Where do I find the official conditions?
The scheme’s conditions and application process are published by IRAS. Confirm the current requirements before applying, and remember GST registration itself is covered in our GST registration guide.
How we can help
Whether the Cash Accounting Scheme helps or hurts depends entirely on your payment cycles, and the answer is different for every business. Raffles Corporate Services helps small businesses assess GST scheme options, handle the application, and keep GST reporting accurate once a scheme is in place. If cash flow around GST is a pain point, we can help you work out whether cash accounting is the right fix.
This article is for general information only and does not constitute tax advice. GST scheme conditions change; confirm the current requirements with IRAS or a qualified adviser before acting.
— The Editorial Team, Raffles Corporate Services