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CH 4: Adjustment for change to accounting practice
or “How changing your accounting method affects money owed for tax purposes”
You could also call this:

“How GST adjustments affect your income tax”

When you apply goods and services, you might need to make an adjustment under section 20(3)(e) of the Goods and Services Tax Act 1985. If you do, this adjustment is counted as income for you.

However, this rule doesn’t apply if you’re making an adjustment for a capital asset. Capital assets are things like buildings or machines that you use in your business for a long time.

The income from this adjustment is counted in the income year when you calculate the amount. This means you include it in your income for the tax year when you work out how much the adjustment is.

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Next up: CH 6: Adjustments for certain finance and operating leases

or “How to adjust your income when certain leases change”
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Part C Income
Adjustments

CH 5Adjustment for GST

  1. An adjustment taken into account under section 20(3)(e) of the Goods and Services Tax Act 1985 relating to the application of goods and services is income of a person.

  2. This section does not apply to an adjustment made in relation to a capital asset.

  3. The income is allocated to the income year in which the amount is calculated.

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Notes
  • Section CH 5(1): amended, on (applying to taxable supplies made on or after 1 April 2011), by section 31(1) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
  • Section CH 5(2): substituted, on (applying to taxable supplies made on or after 1 April 2011), by section 31(2) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).
  • Section CH 5(3) list of defined terms taxable supply: repealed, on , by section 31(3) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).