A New Tax System (Goods and Services Tax) Act 1999

Chapter 4 - The special rules  

Part 4-4 - Special rules mainly about net amounts and adjustments  

Note:

The special rules in this Part mainly modify the operation of Part 2-4 , but they may affect other Parts of Chapter 2 in minor ways.

Division 133 - Providing additional consideration under gross-up clauses  

133-5   Decreasing adjustments for additional consideration provided under gross-up clauses  

(1)    
You have a decreasing adjustment if:

(a) you made an acquisition on the basis that:

(i) it was not a * creditable acquisition because the supply to which the acquisition relates was not a * taxable supply ; or

(ii) it was * partly creditable because the supply to which the acquisition relates was only partly a taxable supply; and

(b) you provided * additional consideration for the acquisition in compliance with a contractual obligation that required you, or had the effect of requiring you, to provide additional consideration if:

(i) in a case where subparagraph (a)(i) applies - the supply was later found to be a taxable supply, or to be partly a taxable supply; or

(ii) in a case where subparagraph (a)(ii) applies - the supply was later found to be a taxable supply to a greater extent; and

(c) GST on the supply has not ceased to be payable (other than as a result of its payment); and

(d) at the time you provided the additional consideration, you were no longer entitled to an input tax credit for the acquisition.

Note:

Section 93-5 or 93-15 may provide a time limit on your entitlement to an input tax credit.

(2)    

The amount of the * decreasing adjustment is the difference between:

(a) what would have been the * previously attributed input tax credit amount for the acquisition if:

(i) the * additional consideration for the acquisition had been provided as part of the original *consideration for the acquisition; and

(ii) in a case where you have not held a * tax invoice for the acquisition - you held such an invoice; and

(iii) subsection 29-10(4) did not apply in relation to the acquisition; and

(b) the previously attributed input tax credit amount.

(3)    
To avoid doubt, additional consideration for an acquisition includes a part of the * consideration for the acquisition that:

(a) relates to the amount of GST payable on the * taxable supply to which the acquisition relates; and

(b) at the time of the acquisition, the parties to the transaction under which the acquisition was made assumed was not payable.