Adjustments for goods and services acquired before 1 April 2011

Transitional provision specifies which rules (change-in-use adjustment or apportionment rules) should be used for goods and services acquired before 1 Apr 2011.

Section 21H of the Goods and Services Tax Act 1985

The GST apportionment rules apply to supplies made on or after 1 April 2011. Section 21H is a transitional provision that specifies which rules - the former change-in-use adjustment rules or the new apportionment rules - should be used for goods and services acquired before 1 April 2011.

Previously, there was some confusion over the correct treatment of goods and services that had been acquired before 1 April 2011, but no adjustments had been made under the old rules. These amendments clarify that the former change-in-use rules still apply if the person acquired the goods and services before 1 April 2011 and claimed an input tax deduction in respect of those goods and services, or the supply was zero-rated.3 The new apportionment rules apply if the person had not claimed an input tax deduction before 1 April 2011.

If the new apportionment rules apply, the first adjustment period is treated as starting on the date of acquisition of the goods or services and ending on the date that is the later of the first balance date falling after the date on which they were first used for making taxable supplies, or the date on which the person becomes a registered person.

Application date

The amendment applies from 1 April 2011. However, a "savings" provision allows taxpayers who applied either the old change-in-use adjustment rules or the new apportionment rules in the period between 1 April 2011 and 14 September 2011 to continue with their chosen treatment.


3 This is subject to the limitations rules in sections 21H(2) and (3).