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  


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  

Subdivision 136-B - Bad debts relating to transactions that are taxable or creditable at less than 1/11 of the price  

136-30   Writing off bad debts (taxable supplies)  

The amount of a * decreasing adjustment that you have under section 21-5 , 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 21-5 .

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 written off as bad from the debt to which the decreasing 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.

    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 3 amount. This amount of GST is the adjusted GST amount .

    Step 5.

    Subtract the adjusted GST amount from the previous GST amount.


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