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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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136-35   Recovering amounts previously written off (taxable supplies)  

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(1)    
The amount of an * increasing adjustment that you have under section 21-10 , relating to a * taxable supply that is * taxable at less than 1/11 of the price , is worked out under this section and not under section 21-10 .

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


Step 1.

Work out the amount of GST (if any) that was payable on the supply, taking into account any previous * adjustments for the supply. This amount is the previous GST 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 * price of the supply.


    Step 4.

    Add to the step 3 amount an amount equal to the amount or amounts, written off or overdue for 12 months or more, that have been recovered.


    Step 5.

    Work out the amount of GST (if any), taking into account any previous * adjustments for the supply (but not adjustments relating to bad debts or debts overdue), that would be payable on the supply if the * price of the supply were the step 4 amount. This amount of GST is the adjusted GST amount .


    Step 6.

    Subtract the previous GST amount from the adjusted GST amount.

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