Tax Laws Amendment (2010 GST Administration Measures No. 1) Act 2010 (21 of 2010)

Schedule 1   Adjustments for third party payments

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

13   Before Division 135

Insert:

Division 134 - Third party payments

134-1 What this Division is about

You may have a decreasing adjustment if you make a payment to an entity that acquires something that you had supplied to another entity. The entity receiving the payment may have an increasing adjustment.

134-5 Decreasing adjustments for payments made to third parties

(1) You have a decreasing adjustment if:

(a) you make a payment to an entity (the payee ) that acquires a thing that you supplied to another entity (whether or not that other entity supplies the thing to the payee); and

(b) your supply of the thing to the other entity was a *taxable supply; and

(c) the payment is in one or more of the following forms:

(i) a payment of money;

(ii) an offset of an amount of money that the payee owes to you;

(iii) a crediting of an amount of money to an account that the payee holds; and

(d) the payment is made in connection with, in response to or for the inducement of the payee's acquisition of the thing; and

(e) the payment is not *consideration for a supply to you.

(2) The amount of the *decreasing adjustment is an amount equal to the difference between:

(a) the amount of GST payable on your supply to the other entity, taking into account any other *adjustments relating to the supply; and

(b) the amount of GST that would have been payable for that supply:

(i) if the *consideration for the supply had been reduced by the amount of your payment to the payee; and

(ii) taking into account any other adjustments relating to the supply, as they would have been affected (if applicable) by such a reduction in the consideration.

134-10 Increasing adjustments for payments received by third parties

(1) You have an increasing adjustment if:

(a) you receive a payment from an entity (the payer ) that supplied a thing that you acquire from another entity (whether or not that other entity acquired the thing from the payer); and

(b) your acquisition of the thing from the other entity was a *creditable acquisition; and

(c) the payment is in one or more of the following forms:

(i) a payment of money;

(ii) an offset of an amount of money that you owe to the payer;

(iii) a crediting of an amount of money to an account that you hold; and

(d) the payment is made in connection with, in response to or for the inducement of your acquisition of the thing; and

(e) the payment is not *consideration for a supply from you.

(2) The amount of the *increasing adjustment is an amount equal to the difference between:

(a) the amount of the input tax credit to which you are entitled for your acquisition from the other entity, taking into account any other *adjustments relating to the acquisition; and

(b) the amount of the input tax credit to which you would have been entitled for that acquisition:

(i) if the *consideration for the acquisition had been reduced by the amount of the payer's payment to you; and

(ii) taking into account any other adjustments relating to the acquisition, as they would have been affected (if applicable) by such a reduction in the consideration.

134-15 Attribution of decreasing adjustments

(1) If:

(a) you have a *decreasing adjustment under section 134-5; and

(b) you do not hold a *third party adjustment note for the adjustment when you give to the Commissioner a *GST return for the tax period to which the adjustment (or any part of the adjustment) would otherwise be attributable;

then:

(c) the adjustment (including any part of the adjustment) is not attributable to that tax period; and

(d) the adjustment (or part) is attributable to the first tax period for which you give to the Commissioner a GST return at a time when you hold that third party adjustment note.

However, this subsection does not apply in circumstances of a kind determined by the Commissioner, by legislative instrument, to be circumstances in which the requirement for an adjustment note does not apply.

Note: For the giving of GST returns to the Commissioner, see Division 31.

(2) This section does not apply to a *decreasing adjustment of an amount that does not exceed the amount provided for under subsection 29-80(2).

(3) This section has effect despite section 29-20 (which is about attributing adjustments).

134-20 Third party adjustment notes

(1) A third party adjustment note for a *decreasing adjustment that you have under section 134-5 is a document:

(a) that is created by you; and

(b) a copy of which is given, in the circumstances set out in subsection (2), to the entity that received the payment that gave rise to the adjustment; and

(c) that sets out your *ABN; and

(d) that contains such other information as the Commissioner determines in writing; and

(e) that is in the *approved form.

However, the Commissioner may treat as a third party adjustment note a particular document that is not a third party adjustment note.

(2) You must give the copy of the document to the entity that received the payment:

(a) within 28 days after the entity requests you to give the copy; or

(b) if you become aware of the *adjustment before the copy is requested - within 28 days, or such other number of days as the Commissioner determines under subsection (4) or (6), after becoming aware of the adjustment.

(3) Subsection (2) does not apply to an *adjustment of an amount that does not exceed the amount provided for under subsection 29-80(2).

(4) The Commissioner may determine in writing that paragraph (2)(b) has effect, in relation to a particular document, as if the number of days referred to in that paragraph is the number of days specified in the determination.

(5) A determination made under subsection (4) is not a legislative instrument.

(6) The Commissioner may determine, by legislative instrument, circumstances in which paragraph (2)(b) has effect, in relation to those circumstances, as if the number of days referred to in that paragraph is the number of days specified in the determination.

(7) A determination made under subsection (4) has effect despite any determination made under subsection (6).

134-25 Adjustment events do not arise

To avoid doubt, a payment that gives rise to an *adjustment under this Division cannot give rise to an *adjustment event.