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Office of FINANCIAL SERVICES

Adjustments Note

Whether you make or receive taxable supplies, subsequent events may mean that you paid too much or too little GST, or you claimed too much or too little input tax credit in a previous tax period. In these cases, you may need to make some GST adjustments.

Under the GST Act, an adjustment event occurs when

  • A supply or acquisition is cancelled
  • The consideration for a supply or acquisition is changed (for example by a volume discount)
  • A supply becomes taxable or stops being taxable
  • An acquisition becomes creditable or stops being creditable

Examples are :

  • The return to a supplier of a thing or part of a thing supplied
  • A change to the previously agreed consideration for a supply or acquisition, such as a payment discount or a volume discount

Statutory Obligation of a supplier to issue Adjustment Note

Section 29-75 requires an Adjustment Note to be issued by the supplier for an adjustment that arises from an adjustment event relating to a taxable supply. The supplier must issue the adjustment note within 28 days of the earlier of

  • receiving a request by the recipient of the supply
  • or becoming aware of the adjustment.

There is no need to issue adjustment note if:

  • the GST exclusive value of the taxable supply was $75 or less
  • the recipient of the taxable supply issued the tax invoice, in which case the recipient must issue the adjustment note

An adjustment can be an increasing or decreasing adjustment. An increasing adjustment increases the net amount for the tax period and a decreasing adjustment decreases the net amount for the tax period. The net amount is the difference between the GST payable and the input taxed credit.

Increasing adjustments for supplies (Section 19-50)

If the corrected GST amount is greater than the previously attributed GST, the difference between the corrected GST amount and the previously attributed GST is an increasing adjustment. For example, when MU previously under charge a supply to an external organisation and now adjust the price upwards.

Decreasing adjustments for supplies (Section 19-55)

If the corrected GST amount is less than the previously attributed GST, the difference between the previously attributed amount and the corrected GST is a decreasing adjustment. For example, MU previously over charge a supply to an external organisation and now revise the price downwards.

Increasing adjustments for acquisitions (Section 19-80)

If the previously attributed input tax credit is greater than the corrected input tax credit amount, the difference between the previously attributed input tax credit and the corrected input tax credit is an increasing adjustment. For example MU purchase from a supplier and the supplier has overcharged MU and issues a credit note to revise the charge downwards

Decreasing adjustments for acquisitions (Section 19-85)

If the previously attributed input tax credit is less than the corrected input tax credit amount, the difference between corrected input tax credit amount and the previously attributed input tax credit is a decreasing adjustment. For example MU purchase from a supplier and the supplier has under charge MU and issues a debit note to revise the charge upwards

How does decreasing adjustment impact on us

When there is a decreasing adjustment from an adjustment event, the University cannot claim the adjustment unless we hold an adjustment note. In summary, MU has a decreasing adjustment if:

  • the GST payable on a taxable supply we made to external organisation has decreased; or
  • the input tax credit for a creditable acquisition that MU incurred has increased.

When is it that we do not need to hold an adjustment note

  • There is no need to hold an adjustment note to make a decreasing adjustment if the GST exclusive value of the taxable supply was $75 or less.
  • There is no need to hold an adjustment note to attribute an increasing adjustment.

Statutory requirements for adjustment notes

For adjustment notes relating to tax invoices showing a total amount payable of $1000 or above, the adjustment note must show:

Adjustment Note must be prominently displayed. You may also include such words as "credit adjustment note, debit adjustment note, adjustment credit note or adjustment debit note or Tax Invoice provided the amount is shown as a negative amount

  • Name of the supplier.
  • Australian Business Number (ABN) of the supplier
  • Name of the Recipient
  • Address or ABN of the recipient
  • Date of issue of the adjustment note
  • The difference between the price of the supply before the adjustment event and the new price of the supply
  • A brief explanation of the reason for the adjustment, for example, discount, refund, return
  • The amount of the adjustment to the GST payable or a statement to the effect that the difference in the price of the taxable supply includes GST

For adjustment notes relating to tax invoices showing a total amount payable of less than $1000, adjustment note must show:

Adjustment Note must be prominently displayed. You may also include such words as "credit adjustment note, debit adjustment note, adjustment credit note or adjustment debit note or Tax Invoice provided the amount is shown as a negative amount

  • Name of the supplier.
  • Australian Business Number (ABN) of the supplier
  • Date of issue of adjustment note
  • The difference between the price of the supply before the adjustment event and the new price of the supply
  • A brief explanation of the reason for the adjustment, for example, discount, refund, return
  • The amount of the adjustment to the GST payable or a statement to the effect that the difference in the price of the taxable supply includes GST

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