Disposal is the end of an adjustment period

2012 legislation clarifies that if an asset is disposed of during the time when it is required to be making adjustments, that disposal triggers a final adjustment.

Section 21G(7B) of the Goods and Services Tax Act 1985

New section 21G(7B) clarifies that, if a person disposes of an asset during the time when it is required to be making adjustments, that disposal triggers a final adjustment.  

Example

ABC Limited purchases an asset that is required to be accounted for through 10 adjustment periods under section 21G(4)(a). The first adjustment period finishes on 31 March 2013. On 31 May 2013, the asset is sold in the course or furtherance of ABC's taxable activity. The time immediately before the asset is sold (on 31 May) is treated as the end of an adjustment period for that particular asset - despite the fact that the adjustment period will be only two months, rather than the usual 12. This will be the final adjustment for the asset and the disposal calculation in section 21F will then apply.

Application date

The amendment applies from 2 November 2012.