Making adjustments on your activity statements

How to make adjustments

On this page

Accounts method
Calculation worksheet method
Record your adjustments
Worked example

If you report GST by the full reporting method, you can use either the accounts method or the calculation worksheet method to complete your activity statement for the reporting period. If you report GST by the Simpler BAS reporting method, you use the accounts method to complete each activity statement.

Accounts method

If you use the accounts method, you work out the GST amounts for your sales and purchases from your accounts. You report these amounts on your activity statement.

Report your GST on your BAS at:

increasing adjustments at Label 1A
decreasing amounts at Label 1B.

Calculation worksheet method

If you use the calculation worksheet method, you show the overall adjustment amount multiplied by 11 on the GST calculation worksheet at either:

G7 (adjustments) if you have an overall increasing adjustment
G18 (adjustments) if you have an overall decreasing adjustment.

The amounts you report on your activity statement will depend on whether you report on a cash basis or non-cash basis.

See also

Record your adjustments

To help you to work out your adjustments, we have developed worksheets so you can record all your adjustments for a reporting period and compare your total increasing adjustments and your total decreasing adjustments at the end of the period. There are five worksheets: Sales, Purchases, Bad debts, Creditable purpose, Adjustments summary.

Next step

Download the five worksheets (PDF 72KB)This link will download a file

Worked example

The following example demonstrates the use of the calculation worksheet method with the adjustment worksheets to work out an overall adjustment for a reporting period.

Step 1

Complete the Sales worksheet.

Example: Sales worksheet

Jim and Maria operate a hardware store and are registered for GST. They previously sold a toolbox to Alex and included the amount for the taxable sale of $350 on a previous activity statement.

Alex returns the toolbox when he finds it is not suitable and Jim and Maria agree to refund the full sale price. Jim and Maria show the refund against 'Cancellation of a sale' on the worksheet, as shown below.

One of Jim and Maria's customers is Brian. He is a carpenter and puts his purchases from Jim and Maria on a monthly account. In the previous reporting period, Jim and Maria made taxable sales on credit to Brian of $3,600. Jim and Maria included this amount on their previous activity statement. When Brian pays his account on time, Jim and Maria offer a discount of 3%, or $108. Jim and Maria show the discount against 'Reduction in amount for a sale because of a discount or rebate' on the worksheet, as shown below.

End of example

Sales worksheet
Adjustment for sales	Amount for sales (before the change occurred) included at G1	New amount for sales	Increasing adjustment (see note 1)	Decreasing adjustment (see note 2)
Cancellation of a sale	$350	$0	na	$350
Reduction in amount for a sale because of a discount or rebate	$3,600	$3,492	na	$108
Sale has stopped being taxable	na	na	na	na
Increase in amount for a sale	na	na	na	na
Sale has become taxable	na	na	na	na
Total	na	na	na	$458

Notes:

Fill in this column if the amount in column 3 is more than in column 2. Subtract column 2 from column 3.
Fill in this column if the amount in column 2 is more than in column 3. Subtract column 3 from column 2.

Step 2

Transfer the totals from columns 4 and 5 of the Sales worksheet to line 1 of the Adjustments summary worksheet.

Step 3

Complete the Purchases worksheet.

If an adjustment event for a purchase occurs before you make an annual apportionment adjustment for the purchase, complete columns 2 and 3 without reducing the amounts to account for private use.

Example: Purchases worksheet

Jim and Maria return faulty electrical tools to their supplier. The tools cost them $620, which they included on a previous activity statement to claim GST credits. Jim and Maria show the amount to be refunded to them against 'Cancellation of a purchase' on the worksheet, as shown below.

Jim and Maria purchased a number of mowers for a total price of $10,000 in the previous period. They claimed GST credits for these purchases. They receive a volume rebate of $830 from their supplier. Jim and Maria show the amount of rebate received from their supplier against 'Reduction in purchase price because of a discount or rebate' line on the worksheet, as shown below.

End of example

Purchases worksheet
Adjustment for purchases	Purchase price (before the change occurred) included at G10 and G11	Changed purchase price	Increasing adjustment (see note 3)	Decreasing adjustment (see note 4)
Cancellation of a purchase	$620	$0	$620	na
Reduction in purchase price because of a discount or rebate	$10,000	$9,170	$830	na
A purchase stops being creditable	na	na	na	na
Increase in purchase price	na	na	na	na
A purchase has become creditable	na	na	na	na
Total	na	na	$1,450	na

Notes:

Fill in this column if the amount in column 2 is more than in column 3. Subtract column 3 from column 2.
Fill in this column if the amount in column 3 is more than in column 2. Subtract column 2 from column 3.

See also

Annual apportionment adjustments

Step 4

Transfer the totals from columns 4 and 5 of the Purchases worksheet to line 2 of the Adjustments summary worksheet.

Step 5

Complete the Bad debts worksheet.

Example: Bad debts worksheet

Jim and Maria sold building materials to Eugenio in a previous reporting period, which Eugenio now cannot pay for. Jim and Maria included $1,500 in taxable sales to Eugenio on earlier activity statements. As they cannot collect any of the debt, they write it off in their accounts. Jim and Maria record the amount written off against 'Writing off bad debts or debts overdue for 12 months or more' on the worksheet, as shown below.

Some time ago Maria sold some timber to Dianne, who was renovating her home. It was a taxable sale for which they had accounted for GST. When they could not collect the debt, Jim and Maria wrote it off and made an adjustment on their activity statement for that earlier period. Dianne's financial circumstances have improved and she makes a part payment of $300. Jim and Maria record the amount they receive in the 'Recovering bad debts written off or debts overdue for 12 months or more' line on the worksheet, as shown below.

End of example

Bad debts worksheet
Sales or purchases	Amount written off or recovered	Increasing adjustment (same as in column 2)	Decreasing adjustment (same as in column 2)
Sales – writing off bad debts or debts overdue for 12 months or more	$1,500	na	$1,500
Sales – recovering bad debts written off or debts overdue for 12 months or more	$300	$300	na
Purchases – bad debts written off by your supplier or debts overdue for 12 months or more	na	na	na
Purchases – payment of bad debts written off by your supplier or debts overdue for 12 months or more	na	na	na
Total	na	$300	$1,500

If a bad debt relates to a partly taxable sale or a purchase which is partly for a creditable purpose, the amount of the adjustment is reduced accordingly.

Step 6

Transfer the totals from columns 3 and 4 of the Bad debts worksheet to line 3 of the Adjustments summary worksheet.

Step 7

Complete the Creditable purpose worksheet.

Do not make an adjustment under this step if you intend to make an adjustment under step 9 ('Work out adjustments for goods you use for a private purpose') for the same purchase.

Example: Adjustments for change in extent of creditable purpose

Jim and Maria purchased a vehicle for $35,000 for use in their business. However, as they intended to also use it for private purposes they did not claim the full GST credit for the purchase. (Jim and Maria have not made an annual apportionment election.) At the time they purchased the vehicle, they estimated they would use it in their business 60% of the time.

At the end of the first adjustment period for the vehicle, Jim and Maria find from their log book that they have actually used the vehicle in their business 75% of the time since they purchased it. The percentage of their business use increases by 15% (75% minus 60%). They then multiply 15% by $35,000, which comes to $5,250. They record these amounts in the Creditable purpose worksheet, as shown below.

End of example

Creditable purpose worksheet
Description of purchase	Date acquired	Full purchase price (taking into account adjustments)	Intended (or previously claimed) extent of creditable purpose	Actual extent of creditable purpose	Change in extent of creditable purpose	Increasing adjustment (see note 1)	Decreasing adjustment (see note 2)
Vehicle	na	$35,000	60%	75%	15%	na	$5,250
Total	na	na	na	na	na	na	$5,250

Notes:

Fill in this column if the amount in column 4 is more than the amount in column 5. Multiply the amount in column 3 by the percentage in column 6.
Fill in this column if the amount in column 5 is more than the amount in column 4. Multiply the amount in column 3 by the percentage in column 6.

Jim and Maria have a total of five adjustment periods to track the way they use the purchase because:

the value of the purchase was more than $5,000 but less than $50,000, and
it did not relate to business finance.

See also

Changes in creditable purpose

Step 8

Transfer the totals from columns 7 and 8 of the Creditable purpose worksheet to line 4 of the Adjustments summary worksheet.

Step 9

Work out adjustments for goods you use for a private purpose.

You have an increasing adjustment if you purchased goods (such as items of trading stock) that you planned to use solely for business and for which you claimed GST credits, but then used the goods solely for a private or domestic purpose.

The amount that you included for the purchase at G10 (capital purchases) or G11 (non-capital purchases) on an earlier activity statement should be shown in line 5 of the Adjustments summary worksheet.

Do not make an adjustment under this step if you have made an adjustment under step 7 for the same goods in this reporting period or any earlier reporting period.

Step 10

Work out any other increasing adjustments and multiply them by 11. Also work out any other decreasing adjustments and multiply them by 11. Show the results of these calculations at lines 6 to 10 of the Adjustments summary worksheet.

Record annual apportionment adjustments at line 10 (Other adjustments).

Step 11

Work out the overall adjustment for the reporting period.

Example: Adjustments summary worksheet

Jim and Maria work out their adjustments using the different adjustment worksheets. They use the Adjustments summary worksheet to work out their overall adjustment for the reporting period.

End of example

In the following Adjustments summary worksheet table:

Lines 1 to 5 – show adjustments you can work out using these instructions

Lines 6 to 10 – show adjustments that may require more information.

Adjustments summary worksheet
Line	Reason for adjustment	Increasing adjustment	Decreasing adjustment
1	Adjustments for sales following adjustment events	na	$458
2	Adjustments for purchases following adjustment events	$1,450	na
3	Bad debts written off or recovered	$300	$1,500
4	Change in extent of creditable purpose	na	$5,250
5	Goods solely for private or domestic purposes	na	na
6	Insurance settlements	na	na
7	Company amalgamations	na	na
8	Sales of things used to make financial supplies or used privately	na	na
9	Sales of going concerns	na	na
10	Other adjustments	na	na
11	Total	A $1,750	B $7,208

Step 12

If the total at A is greater than the total at B, transfer the difference to G7 of the calculation worksheet. If the total at B is greater than the total at A, transfer the difference to G18 of the calculation worksheet.

Example: Transferring to calculation worksheet

Jim and Maria transfer the amount of $5,458 from their adjustments summary worksheet to G18 (adjustments) of their calculation worksheet.

End of example

Do not enter an amount at both G7 and G18.

Last modified: 02 Jun 2020QC 17537