Show download pdf controls
  • 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

     

    $350

    Reduction in amount for a sale because of a discount or rebate

    $3,600

    $3,492

     

    $108

    Sale has stopped being taxable

     

     

     

     

    Increase in amount for a sale

     

     

     

     

    Sale has become taxable

     

     

     

     

    Total

     

     

     

    $458

    Notes:

    1. Fill in this column if the amount in column 3 is more than in column 2. Subtract column 2 from column 3.
    2. 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 1)

    Decreasing adjustment (see note 2)

    Cancellation of a sale

    $620

    $0

    $620

     

    Reduction in purchase price because of a discount or rebate

    $10,000

    $9,170

    $830

     

    A purchase stops being creditable

     

     

     

     

    Increase in purchase price

     

     

     

     

    A purchase has become creditable

     

     

     

     

    Total

     

     

    $1,450

     

    Notes:

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

    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

     

    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

     

    $1,500

    Recovering bad debts written off or debts overdue for 12 months or more

    $300

    $300

     

    Purchases

     

     

     

    Bad debts written off by your supplier or debts overdue for 12 months or more

     

     

     

    Payment of bad debts written off by your supplier or debts overdue for 12 months or more

     

     

     

    Total

     

    $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

     

    $35,000

    60%

    75%

    15%

     

    $5,250

    Total

     

     

     

     

     

     

    $5,250

    Notes:

    1. 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.
    2. 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:

    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 have worked 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
    Adjustments summary worksheet

    Line

    Reason for adjustment

    Increasing adjustment

    Decreasing adjustment

    Adjustments you can work out using these instructions

     

     

    1

    Adjustments for sales following adjustment events

     

    $458

    2

    Adjustments for purchases following adjustment events

    $1,450

     

    3

    Bad debts written off or recovered

    $300

    $1,500

    4

    Change in extent of creditable purpose

     

    $5,250

    5

    Goods solely for private or domestic purposes

     

     

    Adjustments that may require more information

     

     

    6

    Insurance settlements

     

     

    7

    Company amalgamations

     

     

    8

    Sales of things used to make financial supplies or used privately

     

     

    9

    Sales of going concerns

     

     

    10

    Other adjustments

     

     

    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: 30 Jun 2017QC 17537