GST and adjustment notes

GST Ruling GSTR 2013/2, released on 21 August 2013, sets out the requirements for adjustment notes under Div 29 of the GST Act. It outlines:

• when a document is in the approved form for an adjustment note;

• the information requirements the Commissioner has determined under s 29-75(1)(c) and an explanation of how the information requirements in the A New Tax System (Goods and Services Tax) Adjustment Note Information Requirements Determination 2012 apply; and

• when the Commissioner will treat a particular document as an adjustment note, even though that document does not meet all of the adjustment note requirements under s 29-75(1).

The Ruling was previously issued as Draft GST Ruling GSTR 2013/D1 and remains largely the same. With the release of this Ruling, the ATO has also withdrawn GST Ruling GSTR 2000/1 (adjustment notes) with effect from 21 August 2013.

Approved form

The Ruling states that a document is in the approved form if it includes the information required by s 29-75(1) of the GST Act, including any additional information requirements that the Commissioner has determined in legislative instruments, and required by s 54-50 regarding GST branches, where applicable. It states that details of more than one adjustment may be shown on the adjustment note, and it will remain an adjustment note in the approved form for all other adjustments if one adjustment does not meet the requirements in s 29-75(1). Adjustment notes may also be in electronic form, as long as they meet the requirements of ss 29-75(1) and 54-40(1), if applicable.

Legislative instruments information requirements

According to the Ruling, for a document to be an adjustment note or a recipient created adjustment note it must meet certain information requirements, including the following:

• Particular information listed in the adjustment note must be clearly ascertainable from the information in the document – While the information does not have to be in any particular format, the information must be able to be found in the document or determined from the information within the document (ie if the information can only be determined by reference to another external source such as the Australian Business Register or another document, then that information cannot be clearly ascertained). In addition, one piece of information may be sufficient to satisfy more than one information requirement in subclauses 5(1) or 5(2) of the legislative instrument.

• It must clearly be intended as an adjustment note and must indicate the effect of the adjustment – It must be clear from the document that it is intended to be an adjustment note, which can be met by including the words "adjustment note", "GST adjustment", "tax invoice adjustment" or "amended tax invoice", among other things. However, in some situations, the context of the document itself may make the intention clear without any title to that effect. In addition, it must also be clear from the document what the effect of the adjustment is (ie debit or credit amount for the supplier or recipient). Whether a document was intended as an adjustment note and the effect of the adjustment is an objective test which can be satisfied by reference to the document.

• It must contain the identity of the supplier or the recipient, as required – It must include information to establish the identity of the supplier (or agent) and recipient (or agent), including the legal names or registered business names. Where the supplier or recipient is a trust, the identity of the trust (including registered business name, or the trustee's name) must be clearly ascertainable. In cases of supplies and acquisitions by representatives of incapacitated entities, the identity of the incapacitated entity must be shown. Where a member, officer, or employee of a company has made a pre-establishment acquisition to which Div 60 applies, an adjustment note is required to identify the member, officer, or employee.

• It must indicate the difference between the prices of the supply before and after the adjustment event – The difference must be clearly shown, or enough information must be provided for the difference to be clearly ascertainable.

• There may be a combined adjustment note and tax invoice – One document may be both a tax invoice and an adjustment note, provided it satisfies the requirements in s 29-70(1) for tax invoices and s 29-75(1) for adjustment notes. An example is a monthly statement that shows supplies made during the month as well as any adjustment from previous months, such as returns or discounts.

• There may be an adjustment note contained in two documents (commercial credit/debit note) and a tax invoice – Where suppliers cancel the original invoice with a credit note and then issue a new tax invoice showing the new price, the document may still be used to attribute a decreasing adjustment if at least one of the documents satisfies s 29-75(1)(a) and (b), and if both documents read together satisfy the requirement that the Commissioner has determined in the legislative instrument. However, both documents must be held before a decreasing adjustment can be claimed.

Commissioner's discretion to treat a document as an adjustment note

The Ruling indicates that the Commissioner will exercise his discretion to treat a document that does not satisfy adjustment note requirements on a case-by-case basis. The factors that the Commissioner will consider in exercising the discretion are considered in Practice Statement Law Administration PS LA 2004/11 (regarding the Commissioner's discretion to treat a particular document as a tax invoice or adjustment note). The factors contained in that practice statement are not exhaustive and there may be other circumstances that are relevant in each particular case.

When the Commissioner excises the discretion to treat a document as an adjustment note, it becomes an adjustment note from the date it is created as defined in s 195-1, and the treatment applies for both the supplier and the recipient. However, the Ruling says this does not mean that the supplier had, before the exercise of the discretion, complied with their obligation to issue an adjustment note within the required time.

Correcting errors on an adjustment note

Where a document issued as an adjustment note contains errors or omissions (eg transpositional errors, or an incorrect price), it may not meet the requirements of an adjustment note. In that situation, the Ruling indicates that the supplier may cancel and reissue the document for adjustment, unless the Commissioner has already exercised the discretion to treat a document as an adjustment note.

Date of effect

The Ruling applies on and from the date of issue.