A New Tax System (Indirect Tax and Consequential Amendments) Act 1999 (176 of 1999)

Schedule 3   Income Tax Assessment Act 1997

Part 1   General

14   After Division 26

Insert:

Division 27 - Effect of input tax credits etc. on deductions

Guide to Division 27

27-1 What this Division is about

This Division sets out the effect of the GST in working out deductions. Generally speaking, input tax credits, GST and adjustments under the GST Act are disregarded.

Table of sections

27-5 Input tax credits and decreasing adjustments

27-10 Certain increasing adjustments

27-15 GST payments

27-20 Elements in calculation of amounts

27-25 GST groups and GST joint ventures

[This is the end of the Guide.]

27-5 Input tax credits and decreasing adjustments

You cannot deduct under this Act a loss or outgoing you incur, to the extent that the loss or outgoing includes an amount relating to an *input tax credit to which you are entitled or a *decreasing adjustment that you have.

27-10 Certain increasing adjustments

(1) You can deduct an amount of an *increasing adjustment that arises under Division 129 or 132 of the *GST Act.

(2) However, you cannot deduct the amount to the extent (if any) that the adjustment arises from an increase in the extent to which the activity giving rise to the adjustment is of a private or domestic nature.

(3) If:

(a) you have an *increasing adjustment under Division 138 of the *GST Act in respect of an asset as a result of the cancellation of your *registration; and

(b) immediately after the cancellation, you held the asset for the purpose of gaining or producing assessable income;

you can deduct the amount of the increasing adjustment.

27-15 GST payments

(1) You cannot deduct under this Act a loss or outgoing consisting of a payment under Division 33 of the *GST Act.

(2) This section does not apply to the payment:

(a) to the extent (if any) that the *net amount to which the payment relates was increased under section 21-5 of the A New Tax System (Wine Equalisation Tax) Act 1999 (which allows for such increases to take account of wine equalisation tax); and

(b) to the extent (if any) that the *net amount was increased under section 13-5 of the A New Tax System (Luxury Car Tax) Act 1999 (which allows for such increases to take account of luxury car tax); and

(c) to the extent (if any) that the *net amount was increased under paragraph 13-10(1)(a) of the A New Tax System (Luxury Car Tax) Act 1999 (which allows for such alterations to take account of increasing luxury car tax adjustments under that Act).

(3) This section does not apply to the payment of *GST (under section 33-15 of the *GST Act) on a *taxable importation that:

(a) was not a *creditable importation; or

(b) was *partly creditable;

but only to the extent that that payment of GST exceeds the *input tax credit (if any) to which you are entitled for that importation.

27-20 Elements in calculation of amounts

In calculating an amount that you may be able to deduct:

(a) an element in the calculation that is an amount paid or payable is treated as not including an amount equal to any *input tax credit for an *acquisition related to the amount paid or payable, or any *decreasing adjustment related to that amount; and

(b) an element in the calculation that is an amount received or receivable is treated as not including an amount equal to any *GST payable on a *taxable supply related to the amount received or receivable, or any *increasing adjustment related to that amount.

27-25 GST groups and GST joint ventures

(1) A *member of a *GST group is to be treated, for the purposes of this Division, as if Subdivision 48-B of the *GST Act (other than subsections 48-45(3) and (4)) did not apply to that member.

(2) A *participant in a *GST joint venture is to be treated, for the purposes of this Division, as if Subdivision 51-B of the *GST Act did not apply to that participant.

[The next Division is Division 30.]