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16 Feb 11 Third party payment adjustments - administrative treatment

The ATO has advised the administrative treatment it will apply following the passage of amendments to Division 134 of the GST Act by Tax Laws Amendment (2010 Measures No 4) Act 2010 (the Amending Act), which received Royal Assent on 7 December 2010.

Schedule 1 to the Amending Act amends Division 134 of the GST Act to ensure that the appropriate GST outcome is achieved in relation to third party payments where the taxable status of the supply alters as it moves through the supply chain or the payee obtains a refund under the tourist refund scheme.

The measure ensures that:

  • There is no decreasing adjustment for the payer of a third party rebate if the supply to the payee of the rebate is GST-free, not connected with Australia or is subject to a refund of GST under the tourist refund scheme, provided that the payer knows or has reasonable grounds to suspect that this is the case.
  • The payee of a third party payment is not required to make an increasing adjustment if the supply by the payer was not a taxable supply.

The amendment applies retrospectively from 1 July 2010. As a result, affected taxpayers will now need to review their positions in the manner set out in the ATO's advice.


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