Interior Design Accounting Singapore: GST, Deposits and Job Costing for Renovation Firms
Interior design accounting in Singapore turns on three clocks that rarely line up: when cash arrives, when GST is due and when profit is earned. A GST-registered interior design (ID) or renovation firm accounts for GST on a deposit or progress payment when it is received or invoiced, whichever comes first, but the money becomes revenue only as the work is done.
This guide is for owners of interior design and renovation firms who collect deposits, bill in stages and pay subcontractors. Amounts are in Singapore dollars (SGD), and the rules are as at November 2026.
Key takeaways
- GST on deposits and progress payments is due at the earlier of payment received or invoice issued, so a deposit received on 25 March goes in the January to March return, due 30 April, even if no work was done that quarter.
- A letter of claim is not a tax invoice. Issue the tax invoice when the client certifies the work.
- One signed contract can trigger GST registration: apply within 30 days once you reasonably expect taxable turnover above $1 million in the next 12 months.
- IRAS taxes contract income over time, not on completion, and allows defect and warranty costs only when they are incurred.
- Renovating HDB flats requires a DRC listing, and CaseTrust-accredited firms must cap deposits at 20%.
Table of Contents
- When Do Renovation Contractors Account for GST?
- Deposit-to-Handover GST Timeline
- Does a Renovation Company Need to Register for GST?
- How Should an Interior Design Firm Record Customer Deposits?
- Progress Billing Accounting: Revenue, Job Costing and WIP
- Subcontractor Records and Misclassification Risk
- HDB DRC and CaseTrust Basics for Renovation Firms
- Renovation Company Tax and Capital Allowances
- Common GST and Accounting Mistakes in Renovation Firms
- When to Get Help with Interior Design Accounting
- Frequently Asked Questions
- Official Sources
When Do Renovation Contractors Account for GST?
A GST-registered firm charges 9% GST on its renovation work, because IRAS requires GST on all construction services whether the property is residential or non-residential. IRAS's GST: Construction Industry e-Tax Guide (fifth edition, 30 January 2026) sets one timing rule for the whole job: account for GST at the earlier of receiving payment or issuing an invoice.
- Deposits and booking fees that will be offset against the contract price are part payments, so GST on renovation deposits is due when you receive them, or when you invoice them if that comes first. A refundable security deposit attracts GST only when you use it to offset an amount the client owes.
- Progress payments, variation orders and retention sums are taxed at each invoice or payment, whichever comes first.
- A payment received before you invoice needs an invoice within 30 days of receipt.
A letter of claim cannot serve as a tax invoice because it is not the final amount. Issue the tax invoice when the client or their consultant certifies the work, keep the certificate of work done, and adjust later with a credit note or a further tax invoice. Homeowners who are not GST-registered can be given a receipt instead, but the GST timing does not change.
Quotations to homeowners must show the GST-inclusive price at least as prominently as any GST-exclusive figure, so write $109,000 including GST rather than only "$100,000 + GST". Breaching IRAS's price display rules can lead to a fine of up to $5,000.
Deposit-to-Handover GST Timeline
Example: Company A Pte Ltd is GST-registered and files returns for calendar quarters. It signs a condominium renovation for $100,000 before GST, with a 20% deposit, the CaseTrust maximum.
| Stage and date | Billed (before GST) | GST at 9% | GST return it falls in | In the accounts |
|---|---|---|---|---|
| Contract signed (10 Mar 2027) | Nil | Nil | None: nothing invoiced or paid | Not recorded |
| 20% deposit received (25 Mar 2027) | $20,000 | $1,800 | Jan–Mar 2027, due 30 Apr 2027 | Customer deposit (a liability) |
| Works start, 40% invoiced (12 Apr 2027) | $40,000 | $3,600 | Apr–Jun 2027, due 31 Jul 2027 | Revenue as work is done |
| Variation order invoiced (20 May 2027) | $5,000 | $450 | Apr–Jun 2027 | Revenue as work is done |
| Carpentry done, 30% invoiced 28 Jun 2027, paid 8 Jul | $30,000 | $2,700 | Apr–Jun 2027, as the invoice came first | Receivable until paid |
| Handover, final 10% invoiced (30 Jul 2027) | $10,000 | $900 | Jul–Sep 2027, due 31 Oct 2027 | Remaining revenue |
| 12-month defects period | Nil | Nil | No extra GST unless you bill extra work | Rectification costs deductible when incurred |
| Total | $105,000 | $9,450 |
Company A owes $1,800 for a quarter in which it did no work on the job, then $6,750 for April to June, including $2,700 on an invoice paid in July. Set aside the GST on every receipt; a slow payer means you fund it.
Retention on commercial fit-outs. If a client certifies $50,000 of work and withholds 5% ($2,500), a tax invoice for the full $50,000 puts all $4,500 of GST in the current return. If you invoice $47,500 now ($4,275 GST) and the retention on release, the $225 of GST on it is due then, or on payment if earlier.
Does a Renovation Company Need to Register for GST?
Registration is compulsory once taxable turnover passes $1 million under either of IRAS's registration tests:
| Test | Trigger | Apply by | Registered from |
|---|---|---|---|
| Retrospective | Above $1 million in a calendar year | 30 January of the next year | 1 March of the next year |
| Prospective | You reasonably expect above $1 million in the next 12 months | 30 days after the forecast | 2 months after the forecast |
Renovation revenue is lumpy, so the prospective test is the one that catches firms out. Signed contracts, accepted quotations and confirmed purchase orders support a forecast; one based only on business plans or sales targets is too uncertain.
Example: Company B is not registered. On 2 November 2026 it signs a $400,000 office fit-out, on top of $650,000 of accepted quotations already due to be billed in the coming months, so it can reasonably expect more than $1 million in the next 12 months and has the documents to show it. It must apply by 2 December 2026 and is registered from 2 January 2027. From that date GST applies to every payment it receives or invoices, including progress payments on contracts signed earlier, and whether it can add 9% to those contracts depends on their terms. Add a GST clause to your quotations once you near $1 million.
Late registration is backdated: you pay GST on past sales you never charged, plus a possible fine of up to $10,000 and a penalty of 10% of the GST due, which IRAS generally waives if you disclose the lateness when applying. Conversely, if you crossed $1 million in a calendar year but are certain the next 12 months will be $1 million or less because of specific circumstances you can document, you need not register, though you must keep monitoring.
Registering voluntarily adds 9% GST to residential quotes that homeowners cannot claim back and that an unregistered competitor does not charge, although you do recover the GST charged on your own purchases. Voluntary registrants must stay registered for at least 2 years, and those applying from 1 April 2026 must use InvoiceNow from the start. Our GST registration service handles the application.
How Should an Interior Design Firm Record Customer Deposits?
Record a deposit as a liability, not income: until the work is done, you owe the client that work or a refund. Company A's deposit is booked as:
| Account | Debit | Credit |
|---|---|---|
| Bank | $21,800 | |
| Customer deposits (contract liability) | $20,000 | |
| GST output tax | $1,800 |
Deposits and billings then move into revenue as the work is done. The cash effect is easy to miss. Here is Company A on 30 April 2027, after collecting the deposit and the 40% payment, with $17,500 of its estimated $70,000 costs spent:
| Position at 30 April 2027 | Amount |
|---|---|
| Collected before GST ($60,000) less costs paid ($17,500) | $42,500 |
| Revenue earned: 25% complete ($17,500 ÷ $70,000) × $100,000 | $25,000 |
| Profit earned so far ($25,000 − $17,500) | $7,500 |
| Billed ahead of the work (contract liability) | $35,000 |
| Still to collect vs still to spend | $40,000 vs $52,500 |
The job has put $42,500 in the bank, plus $5,400 of GST that belongs to IRAS (less input tax on costs). Only $7,500 of it is profit, and finishing will cost $12,500 more than the client still owes. Spend that cash on overheads or the next job, and this one runs short at handover.
Keep deposits in a separate bank account, or check each month that cash covers customer deposits, GST payable and subcontractor balances. If a client cancels and you refund a part-payment deposit, a credit note supports adjusting the GST you paid.
Progress Billing Accounting: Revenue, Job Costing and WIP
IRAS's guidance for construction companies, the closest official guidance for renovation contracts, accepts income recognised over time, and revenue measured under FRS 115 or SFRS(I) 15 unless it deviates significantly from tax principles. It does not accept the completed contract method, where profit waits until the job is 100% complete. Deferring profit until a job reaches a minimum stage (IRAS cites 20% as common) needs supporting evidence.
- Measure progress consistently, usually costs to date against total estimated costs, as above. Leave out bought-in items delivered but not yet installed, such as tiles or appliances, or you may overstate progress.
- Compare earned revenue with billings at each month end. Billing ahead of the work is a contract liability; work done but not billed is a contract asset (unbilled WIP).
- Book expected losses once a job's costs will exceed its price, but IRAS does not allow provisions for foreseeable losses for tax.
IRAS also expects construction companies to keep profit or loss records project by project. Good interior design firm bookkeeping therefore starts with job costing:
- Give each contract a job code and tag every supplier invoice, subcontractor claim and site expense to it.
- Load the quotation's cost budget by trade when the contract is signed.
- Approve variation orders in writing before the work starts, then bill them as separate lines.
- Each month, update the cost to complete, the stage of completion and the margin.
- At handover, compare the final margin with the quote and keep a defects code open.
KPIs to review monthly
| KPI | What it tells you |
|---|---|
| Gross margin by job, actual vs quoted | Whether you price and control jobs well |
| Billings vs work done | Whether clients fund your jobs or you fund theirs |
| Unbilled variation orders | Work you are giving away |
| Overdue final payments and retention | Cash stuck after handover |
| Cash vs deposits, GST and subcontractor balances | Whether deposits are being spent |
| Defect call-back costs | Workmanship and subcontractor quality |
Monthly management accounts are the natural place to track these numbers.
Subcontractor Records and Misclassification Risk
Subcontractor costs, including retention you hold back, are deductible when your liability to pay arises, provided they meet IRAS's normal tests (see the FAQ below). Keep the quotation or subcontract, variation instructions and invoices coded to each job, and pay by bank transfer.
For GST:
- A subcontractor's letter of claim cannot support your input tax claim. You need a tax invoice addressed to your company.
- If you supply materials to a supply-and-install subcontractor, each side invoices the gross value of its own supply, not the net amount.
- Input tax claimed on a bill you have not paid within 12 months of its due date must be repaid. You can claim it again once you pay, within 5 years of the end of the accounting period in which you first claimed it.
Misclassification is the bigger risk. Someone who works only for you, on your schedule, with your tools and no risk of loss may be an employee. MOM's contract of service guidance weighs control, ownership of tools and materials, and whether the person runs a business on their own account, and says no single test is conclusive. For Singapore Citizen and PR employees you owe CPF, and late CPF attracts interest of 1.5% a month. Since 1 June 2025, firms must register with BCA's Contractors Registration System before hiring construction Work Permit or S Pass holders, and only the foreign worker levy net of rebates is deductible.
HDB DRC and CaseTrust Basics for Renovation Firms
Contractors must be listed in HDB's Directory of Renovation Contractors (DRC) before renovating HDB flats, and flat owners must use only DRC contractors, even for works that need no HDB approval. Several DRC application conditions depend on your records: a company registered with ACRA and owned by the applicant (a Singapore Citizen or PR with 3 years' renovation experience, or 1 year with CaseTrust) for at least a year, a profitable past year, at least $50,000 paid-up capital for a private limited company, a full-time employee, and accounts covering the past year. Applicants without CaseTrust also submit 5 completed private-project quotations and invoices totalling at least $100,000 with wet or hacking works.
The fee is $100 and HDB gives a result within 21 working days. Renewal is due at least 3 months before expiry, with a new bank, insurance or finance guarantee, and 24 demerit points within 24 months means delisting and a 1-year suspension.
CaseTrust, the voluntary accreditation run by CASE, caps the initial deposit at 20% of the total cost and requires milestone payments, a 12-month workmanship warranty from completion, written variations before work starts, a deposit performance bond and its Standard Renovation Contract. CaseTrust-accredited DRC contractors are listed for 5 years instead of 4.
For commercial fit-outs under written contracts, the Security of Payment Act gives you a statutory right to progress payments. It does not cover HDB renovations or homes whose works need no Building Plan submission; our construction contractor accounting guide explains payment claims.
Renovation Company Tax and Capital Allowances
Renovation company profits are taxed at 17% on chargeable income after the partial tax exemption (75% of the first $10,000 and 50% of the next $190,000) or, in a qualifying new company's first three YAs, the start-up tax exemption. For YA 2026, IRAS also applies a 50% corporate income tax rebate automatically in the assessment, capped at $40,000 per company including any CIT Rebate Cash Grant. Companies with revenue of $5 million or less usually file Form C-S, and YA 2026 returns are due on 30 November 2026.
| Item | Income tax | GST input tax |
|---|---|---|
| Vans and lorries, including COE | Capital allowances over 3 years or working life; running costs deductible | Claimable |
| Cars (S-, Q- or RU-plated), even for site visits | No capital allowances; running costs not deductible | Not claimable |
| Tools costing $5,000 or less each | One-year write-off, capped at $30,000 in total per YA | Claimable |
| Computers, printers and purchased software | 100% write-off in one year | Claimable |
| Renovating your own office or showroom | Section 14N: up to $300,000 for YA 2025 to YA 2027, over 3 YAs or by election in 1 YA | Claimable |
| Defect or warranty provisions | Not deductible; actual costs deductible when incurred | Claimable on actual costs |
| Liquidated damages paid to a client | Deductible when due and payable | Outside GST, as they are compensatory |
Input tax claims need a valid tax invoice addressed to your company, or a simplified tax invoice for purchases of $1,000 or less including GST.
Help commercial clients claim section 14N. From YA 2025, designer fees count towards a client's section 14N deduction if they do not relate to structural works needing approval from the Commissioner of Building Control. IRAS's section 14N e-Tax Guide expects the client to keep an itemised list of works and costs with the premises address, so invoices that separate wiring, lighting, flooring, false ceilings and fixed partitions from structural works and loose furniture make your firm easier to buy from.
Common GST and Accounting Mistakes in Renovation Firms
- Waiting until handover to account for GST on deposits and progress payments.
- Recharging client purchases without GST. If the supplier invoiced your firm, the recharge is a reimbursement and carries GST, even at cost. Only payments made as the client's agent, such as a permit fee in the client's name, are disbursements outside GST.
- Claiming input tax on invoices addressed to the homeowner, or on car expenses.
- Charging GST before you are registered. IRAS is prepared not to penalise unauthorised collection that is voluntarily disclosed.
- Spending deposits as profit, or deducting warranty provisions for tax.
- Forgetting bad debt relief. If a client never pays an invoice you paid GST on, you can claim that GST back if, among other conditions, the debt is written off, 12 months have passed since the supply and you have taken reasonable steps to recover it. Claim within 5 years of the supply.
Found an error in a filed return? A net GST error of $3,000 or less, with each period's other errors within 5% of total supplies, can be corrected in your next GST F5; otherwise, file a GST F7 on myTax Portal. A qualifying voluntary disclosure within one year of the filing deadline attracts no penalty. See also the top GST mistakes SMEs make and our GST F5 filing guide.
When to Get Help with Interior Design Accounting
A design-only studio well below the GST threshold, billing in a few stages and reconciling its own bank account, may need an accountant only once a year, for the financial statements and Form C-S.
Get help when deposits and progress billing run across several jobs, when you are GST-registered or nearing $1 million, before a DRC application, or when your bank balance and your profit stop making sense together. Tax Filing SG is run by ex-Big 4 Singapore Chartered Accountants (ISCA members) who serve Singapore SMEs; see our accounting services, and we quote once we have reviewed your jobs and records.
Frequently Asked Questions
Are subcontractor payments tax deductible?
Yes, if they are incurred solely to produce your income, are revenue rather than capital in nature and are not prohibited under the Income Tax Act 1947. They are deductible when your legal liability to pay arises, including retention sums payable to subcontractors. Keep the subcontract or quotation, the invoices and your bank payment records for each job.
Do I need to be an HDB registered renovation contractor?
Only if your firm carries out renovation works in HDB flats. HDB requires contractors to be listed in its Directory of Renovation Contractors (DRC) before doing such work, and flat owners must engage only DRC contractors, even for works needing no HDB approval. An unlisted contractor carrying out HDB renovations faces a fine of up to $5,000 on conviction.
Is renovation of a residential home subject to GST?
Yes, if your firm is GST-registered. IRAS requires GST on all construction services, whether the property is residential or non-residential, so renovating an HDB flat, condominium or landed house is standard-rated at 9%. The GST exemption for residential property covers selling or leasing it, not renovating it. An unregistered firm must not charge GST.
What happens to GST if a client cancels and I refund the deposit?
If you accounted for GST on a part-payment deposit and later refund it, you may adjust that GST, supported by documents such as a credit note. A refundable security deposit attracts GST only when used to offset an amount owed. IRAS's forfeited-deposit guidance covers tenancy cases only, so take advice before reversing GST on a forfeited renovation deposit.
Can my company claim capital allowances on a car used for site visits?
No. Capital allowances cannot be claimed on S-plated, Q-plated or RU-plated cars, and IRAS treats their running costs, such as petrol, parking, road tax and ERP charges, as non-deductible even when used for business. GST on cars cannot be claimed either. Vans and lorries qualify for capital allowances, including the COE cost, and their GST is claimable.
Is a provision for defects or warranty claims tax deductible?
Not when you make it. IRAS treats provisions for defects, warranties and liquidated damages as non-deductible because no expense has been incurred. You get the deduction when you rectify the defects and incur the cost, or when liquidated damages become due and payable. Book the provision in your accounts if needed, then add it back in the tax computation.
Official Sources
- IRAS e-Tax Guide: GST: Construction Industry (fifth edition, 30 January 2026)
- IRAS: Construction companies, tax treatment of contract income and expenses
- IRAS: GST on deposits and downpayments
- IRAS: Do I need to register for GST?
- IRAS: Capital allowances for companies
- IRAS e-Tax Guide: Tax deduction for renovation and refurbishment costs (section 14N)
- HDB: Directory of Renovation Contractors application process
- MOM: What is a contract of service
Running an ID or renovation firm and unsure about GST on deposits?
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About Tax Filing SG — We are a Singapore accounting practice run by ex-Big 4 Singapore Chartered Accountants (ISCA). We handle accounting, corporate tax, GST and company secretarial work for Singapore SMEs, including overdue and late filings.
Last updated: 9 November 2026. This article is general information based on IRAS and ACRA guidance as at November 2026, not advice for your specific situation. Rules, rates and deadlines change, so check the official sources above or speak to us before acting.