A New Tax System (Indirect Tax and Consequential Amendments) Act (No. 2) 1999 (177 of 1999)

Schedule 1   Indirect Tax Acts

Part 1   Amendment of the A New Tax System (Goods and Services Tax) Act 1999

106   After Division 135

Insert:

Division 136 - Bad debts relating to partly taxable or creditable transactions

136-1 What this Division is about

If you have an adjustment under Division 21 for a bad debt relating to a supply that was partly taxable or an acquisition that was partly creditable, the amount of that adjustment is reduced under this Division.

136-5 Adjustments relating to partly taxable supplies

If you have an *adjustment under section 21-5 or 21-10 in relation to a supply that was partly a *taxable supply, the amount of that adjustment is reduced to the following amount:

Full ajustment * Taxable proportion

where:

full adjustment is what would be the amount of the adjustment worked out under section 21-5 or 21-10 if this section did not apply.

taxable proportion is the proportion of the *value of the supply (worked out as if it were solely a taxable supply) that the taxable supply represents.

Example: If the amount of an adjustment under section 21-5 would be $100 but the supply was only 80% taxable, the amount of the adjustment is $80.

136-10 Adjustments in relation to partly creditable acquisitions

(1) If you have an *adjustment under section 21-15 or 21-20 in relation to a *creditable acquisition that was *partly creditable, the amount of that adjustment is reduced to the following amount:

(Full adjustment * Extent of creditable purpose * Extent of consideration)

where:

extent of consideration is the extent to which you provide, or are liable to provide, the *consideration for the acquisition, expressed as a percentage of the total consideration for the acquisition.

extent of creditable purpose is the extent of *creditable purpose last used to work out:

(a) the amount of the input tax credit for the acquisition; or

(b) the amount of any *adjustment under Division 129 in relation to the acquisition;

expressed as a percentage of the total purpose of the acquisition.

full adjustment is what would be the amount of the adjustment worked out under section 21-15 or 21-20 if this section did not apply.

(2) If you have an *adjustment under section 21-15 or 21-20 in relation to a *creditable acquisition that was a *reduced credit acquisition and that was not *partly creditable (that is, it is wholly for a *creditable purpose because of Division 70), the amount of that adjustment is reduced to the following amount:

(Full adjustment * Percentage credit reduction * Extent of consideration)

where:

extent of consideration is the extent to which you provide, or are liable to provide, the *consideration for the acquisition, expressed as a percentage of the total consideration for the acquisition.

percentage credit reduction is the reduced input tax credit percentage prescribed for the purposes of subsection 70-5(2) for an acquisition of that kind.

full adjustment is what would be the amount of the adjustment worked out under section 21-15 or 21-20 if this section did not apply.