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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 136 - Bad debts relating to transactions that are not taxable or creditable to the fullest extent  

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Subdivision 136-B - Bad debts relating to transactions that are taxable or creditable at less than 1/11 of the price  

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136-40   Bad debts written off (creditable acquisitions)  

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(1)    
The amount of an * increasing adjustment that you have under section 21-15 , relating to a *creditable acquisition that is * creditable at less than 1/11 of the consideration , is worked out under this section and not under section 21-15 .

(2)    
This is how to work out the amount: Method statement


Step 1.

Work out the amount of the input tax credit (if any) to which you were entitled for the acquisition, taking into account any previous * adjustments for the acquisition. This amount is the previous credit amount .


Step 2.

Add together:

  • (a) the amount or amounts previously written off as bad from the debt to which the increasing adjustment relates; and
  • (b) the amount of the debt that has been * overdue for 12 months or more (other than amounts already written off).


    • Step 3.

    Subtract the step 2 amount from the total amount of the * consideration that you have either provided, or are liable to provide, for the acquisition.


    Step 4.

    Work out the amount of the input tax credit (if any), taking into account any previous * adjustments for the acquisition (but not adjustments relating to bad debts or debts overdue), to which you would be entitled for the acquisition if the * consideration for the acquisition were the step 3 amount. This amount of GST is the adjusted credit amount .


    Step 5.

    Subtract the adjusted credit amount from the previous credit amount.

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