| GST and Adjustments |
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Administration of GST requires an understanding of the impact of adjustments and adjustment events. Adjustments of GST are often an area that is not well understood and therefore can be an item of early attention in any tax office audit. An adjustment event is when something occurs to change the price of some goods, or to cancel a sale or to change the nature of a transaction to become taxable when previously it was GST free (or vice versa). An adjustment, which is the result of one of these events, is a change in the amount of GST payable (and usually in a different period). If a customer wants to return goods, the GST rules talk about an adjustment notice. Most suppliers would satisfy the adjustment rules by issuing a credit note that shows the same information that was contained in the original invoice. This would be included in the Business Activity Statement using the date of the return of goods. When export sale occurs, that is regarded as a GST free sale. Unless the goods are exported within 60 days of the first payment, or of the raising of the invoice, then the sale is taxable. At that time an adjustment note needs to be issued and the overseas customer advised that the goods are now subject to GST. In other words the supplier is liable to pay GST, but the terms of sale and the contract will determine whether the customer or supplier, actually pays the GST. |