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 134 - Third party payments  

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:


(i) was a * taxable supply ; or

(ii) would have been a taxable supply but for a reason to which subsection (3) applies; and


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


(i) a payment of *money or *digital currency;

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

(iii) a crediting of an amount of money or digital currency 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.

(1A)  


However, subsection (1) does not apply if:


(a) the supply of the thing to the payee is a * GST-free supply , or is not * connected with the indirect tax zone ; or


(b) the Commissioner is required to make a payment to the payee, under Division 168 (about the tourist refund scheme), related to the payee ' s acquisition of the thing;

and you know, or have reasonable grounds to suspect, that the supply of the thing to the payee is a GST-free supply or is not connected with the indirect tax zone, or that the Commissioner is so required.

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


(a) either:


(i) if your supply to the other entity was a * taxable supply - the amount of GST payable on the supply; or

(ii) if your supply to the other entity would have been a taxable supply but for a reason to which subsection (3) applies - the amount of GST that would have been payable on the supply had it been a taxable supply;
taking into account any other * adjustments that arose, or would have arisen, relating to the supply; and


(b) the amount of GST that would have been payable, or would (but for a reason to which subsection (3) applies) 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 that arose, or would have arisen, relating to the supply, as they would have been affected (if applicable) by such a reduction in the consideration.

(3)  


This subsection applies to the following reasons why your supply of the thing to the other entity was not a * taxable supply :


(a) you and the other entity are * members of the same * GST group ;


(b) you and the other entity are members of the same * GST religious group ;


(c) you are the * joint venture operator for a * GST joint venture , and the other entity is a * participant in the GST joint venture.

(4)  


However:


(a) paragraph (3)(a) does not apply if you and the payee are * members of the same * GST group when the payment referred to in paragraph (1)(a) is made; and


(b) paragraph (3)(b) does not apply if you and the payee are members of the same * GST religious group when that payment is made.


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