ATO Interpretative Decision

ATO ID 2001/707 (Withdrawn)

Goods and Services Tax

GST and adjustment event - case deal rebate
FOI status: may be released

The ATO view for this issue is covered in Goods and Services Tax Ruling GSTR 2000/19.

This document incorporates revisions made since original publication. View its history and amending notices, if applicable.

CAUTION: This is an edited and summarised record of a Tax Office decision. This record is not published as a form of advice. It is being made available for your inspection to meet FOI requirements, because it may be used by an officer in making another decision.

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If you reasonably apply this decision in good faith to your own circumstances (which are not materially different from those described in the decision), and the decision is later found to be incorrect you will not be liable to pay any penalty or interest. However, you will be required to pay any underpaid tax (or repay any over-claimed credit, grant or benefit), provided the time limits under the law allow it. If you do intend to apply this decision to your own circumstances, you will need to ensure that the relevant provisions referred to in the decision have not been amended or repealed. You may wish to obtain further advice from the Tax Office or from a professional adviser.

Issue

Does the entity, a manufacturer, have an adjustment under section 19-40 of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), when it provides a case deal rebate to a wholesaler?

Decision

Yes, the entity has an adjustment under section 19-40 of the GST Act, when it provides a case deal rebate to a wholesaler.

Facts

The entity is a manufacturer. The entity supplies goods to a wholesaler who distributes the goods to various retailers. The entity is registered for goods and services tax (GST) and the supply of the goods to the wholesaler is a taxable supply under section 9-5 of the GST Act. The entity has attributed the GST on the supply of the goods to the wholesaler in an earlier tax period.

In the current tax period, the entity enters into an arrangement under which the wholesaler sells the goods to the various retailers at a reduced price during a specified period of time and claims a case deal rebate from the entity.

The case deal rebate is a price reduction off a carton of goods. The rebate claim is calculated by multiplying the number of cartons sold by the wholesaler to the retailers by a certain amount.

Reasons for Decision

Section 19-40 of the GST Act provides that an entity has an adjustment for a supply for which it is liable to pay GST if:

•: in relation to the supply, one or more adjustment events occur during a tax period;
•: GST on the supply was attributable to an earlier tax period; and
•: as a result of those adjustment events, the previously attributed GST amount for the supply no longer reflects the amount of GST on the supply, taking into account of any change in circumstances that has given rise to the adjustment event(s).

Under paragraph 19-10(1)(b) of the GST Act, an event that has the effect of changing the consideration for a supply or an acquisition is an adjustment event.

History note:

Paragraph amended on 3 June 2003 to delete 'of' after the word 'changing' in the last sentence of the paragraph.

In this case, the entity enters into an arrangement under which the wholesaler sells the goods to the various retailers at a reduced price during a specified period of time and claims a case deal rebate from the entity. The case deal rebate is a price reduction off a carton of goods. The effect of the plan is to change the consideration for the supply of the goods that the entity supplied to the wholesaler. As such, the payment to the wholesaler is an adjustment event under paragraph 19-10(1)(b) of the GST Act.

History note:

Paragraph amended on 3 June 2003 to delete 'of the' after the word 'payment' in the last sentence of the paragraph.

The entity has attributed the GST on the supply of the goods to the wholesaler in an earlier tax period and as a result of the adjustment event, the previously attributed GST amount for the supply no longer reflects the amount of GST on the supply. Accordingly, the remaining requirements in section 19-40 of the GST Act are also met.

Therefore, the entity has an adjustment under section 19-40 of the GST Act when it provides a case deal rebate to a wholesaler.

[Note: The provision payment of the rebate by the entity to the wholesaler is a change in the consideration for the supply made by the entity to the wholesaler and is an adjustment event under paragraph 19-10(1)(b) of the GST Act. The case deal rebate to the wholesaler is not consideration for a separate supply made by the wholesaler to the entity.]

Date of decision: 13 September 2001

Legislative References:
A New Tax System (Goods and Services Tax) Act 1999
   section 9-5
   paragraph 19-10(1)(b)
   section 19-40

Keywords
Goods & services tax
GST net amounts & adjustments
Adjustment events
Adjustments

Business Line: GST

Date of publication: 30 November 2001

ISSN: 1445-2782

history

	Date:	Version:
	13 September 2001	Original statement
You are here	9 December 2005	Archived

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