Question

In: Accounting

Which of the following statements in relation to GST adjustments is most correct? Select one: 1....

Which of the following statements in relation to GST adjustments is most correct? Select one:

1. If an entity registered for GST on a quarterly basis purchased an item for $8800 in the September 2018 quarter, the last adjustment period will be September 2023

. 2. If an entity which is registered for GST on a quarterly basis purchased an item for $2200 in the December 2018 quarter, the first adjustment period will be June 2019.

3. A decreasing adjustment under Division 129 means that extra GST is liable to be paid.

4. If you claimed a partial input tax credit to take into account some non-creditable use, then no adjustments are required to be made.

5. If an entity which is registered for GST on a quarterly basis purchased an item for $2200 in December 2018 quarter, the first adjustment period will be December 2020.

Solutions

Expert Solution

A decreasing adjustment under Division 129 Means that extra GST is Liable to be paid

It is important to recongnise that this may give rise to an adjustment for GST purposes, pursuant to Division 129 of the GST Act. These Provision amend the extend of input tax credits claimable for GST incurred on costs. The adjustments must be reported as at 30 June each year.

Different input tax credit recoveries apply to different costs, For examples

  • costs may solely relate to residential rent, resulting in a nil recovery percentage.
  • costs may solely relate to properties that are sold, resulting in a 100% recovery percentage.
  • costs may related to the project in entirety, and an approtionment is requird to determine the extent of input tax credits available.
  • certain properties may be held for rent whilealso being marketed for sale.

Division 129 adjustments are calculated as follows

Total GST incurred X(actual recovery %- Intended or former recovery %)

In Practicise, the process of calculating Division 129 adjustments is complex and can be administrative, cumbersome, particularly in respect of projects involving a high volume of expenditure,

Calculating the adjustment

Division 129 adjustments are calculated as follows

Total GST incurred X(actual recovery %- Intended or former recovery %)

In Practicise, the process of calculating Division 129 adjustments is complex and can be administrative, cumbersome, particularly in respect of projects involving a high volume of expenditure

Calculating the adjustment

Division 129 adjustments are calculated as follows

Total GST incurred X(actual recovery %- Intended or former recovery %)

In Practicise, the process of calculating Division 129 adjustments is complex and can be administrative, cumbersome, particularly in respect of projects involving a high volume of expenditur

Division 129 adjustments are calculated as follows

Total GST incurred X(actual recovery %- Intended or former recovery %)

In Practicise, the process of calculating Division 129 adjustments is complex and can be administrative, cumbersome, particularly in respect of projects involving a high volume of expenditure,

ekkarill92 answered 2 years ago
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