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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    View history reference

134-5  Decreasing adjustments for payments made to third parties  

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(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
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(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
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(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)  

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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
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(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.
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(3)  

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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)  

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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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