Goods and Services Tax Industry Issues
Primary Production Industry Partnership

Increasing adjustment under Division 135 of the GST Act

• Please note that the PDF version is the authorised version of this ruling.
  This publication is extracted from the Primary Production Industry Partnership - issues register. See issue 6.2.14 of that register. This publication should be read in conjunction with the related content of that register where further context is required.

This publication provides you with the following level of protection: This publication (excluding appendixes) is a public ruling for the purposes of the Taxation Administration Act 1953. A public ruling is an expression of the Commissioner's opinion about the way in which a relevant provision applies, or would apply, to entities generally or to a class of entities in relation to a particular scheme or a class of schemes. If you rely on this ruling, the Commissioner must apply the law to you in the way set out in the ruling (unless the Commissioner is satisfied that the ruling is incorrect and disadvantages you, in which case the law may be applied to you in a way that is more favourable for you - provided the Commissioner is not prevented from doing so by a time limit imposed by the law). You will be protected from having to pay any underpaid tax, penalty or interest in respect of the matters covered by this ruling if it turns out that it does not correctly state how the relevant provision applies to you.

Question

1. Does the recipient of a supply that is GST-free under section 38-480 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act) have to make an increasing adjustment under Division 135 of the GST Act if the use of the land is converted from:

•

the conduct of a farming business

to

•

the conduct of another enterprise in the course or furtherance of which supplies are made that are either taxable or GST-free?

Answer

2. No. Provided the subsequent supplies are taxable or GST-free, no adjustment should apply even though the supplies are not made through a farming enterprise.

Explanation

3. The words the enterprise in Division 135 of the GST Act should be read as the enterprises. The term is capable of including an enterprise or enterprises other than a farming business. Provided that only taxable or GST-free supplies are made through those enterprises, an adjustment under Division 135 of the GST Act is not required. The Act does not exhibit an intention contrary to adopting the plural form of the word. The fact that section 38-480 of the GST Act itself does not require the recipient to carry on the farming business requires that the plural form be adopted.

References