21F Treatment on disposal

(1)

This section applies when a registered person—

(a)

acquires goods or services in relation to which they do not have a full deduction, taking into account any adjustments made to input tax in adjustment periods after acquisition; and

(b)

subsequently disposes, or is treated as disposing, of the goods or services in the course or furtherance of a taxable activity.

(2)

The person must make a final adjustment of an amount calculated using the formula—

tax fraction × consideration × (1 − (actual deduction ÷ full input tax deduction)).

(3)

For the purposes of the formula in subsection (2),—

(a)

tax fraction has the meaning given in section 2(1), unless subsection (7) applies to the disposal:

(b)

consideration is the amount of consideration received, or treated as received, for the supply:

(c)

actual deduction is the amount of deduction already claimed, taking into account adjustments made up to the date of disposal:

(d)

the amount, when added to any deduction already claimed, must not be more than the amount of the full input tax deduction on acquisition referred to in section 21D(2).

(4)

Despite subsection (2), if the acquisition referred to in subsection (1)(a) relates to a supply that is charged at the rate of 0% under section 11(1)(mb), on a disposal referred to in subsection (1)(b), the person must make a final adjustment of an amount calculated using the formula—

tax fraction × consideration × (1 − previous use).

(5)

For the purposes of the formula in subsection (4),—

(a)

tax fraction has the meaning given in section 2(1), unless subsection (7) applies to the disposal:

(b)

consideration is the amount of consideration received, or treated as received, for the supply:

(c)

previous use is the percentage intended use or the previous actual use in the period before the period in which the disposal occurs.

(6)

The amount given by the formula in subsection (4) must not be more than the amount of output tax that is accounted for by the person under section 20(3J)(a)(iii), taking into account any later adjustments made under the apportionment rules in sections 21 to 21H.

(7)

In the formulas in subsections (2) and (4), on the disposal of the goods or services, if the supply is charged at the rate of 0%, the item tax fraction is treated as 15%.

Section 21F: substituted, on 1 April 2011 (applying to supplies made on or after 1 April 2011), by section 15(1) of the Taxation (GST and Remedial Matters) Act 2010 (2010 No 130).

Section 21F(3): amended (with effect on 1 April 2011), on 29 August 2011 (applying to supplies made on or after 1 April 2011), by section 240(1)(a) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).

Section 21F(3)(a): amended (with effect on 1 April 2011), on 29 August 2011 (applying to supplies made on or after 1 April 2011), by section 240(1)(b) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).

Section 21F(4): added (with effect on 1 April 2011), on 29 August 2011 (applying to supplies made on or after 1 April 2011), by section 240(2) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).

Section 21F(5): added (with effect on 1 April 2011), on 29 August 2011 (applying to supplies made on or after 1 April 2011), by section 240(2) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).

Section 21F(6): added (with effect on 1 April 2011), on 29 August 2011 (applying to supplies made on or after 1 April 2011), by section 240(2) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).

Section 21F(7): added (with effect on 1 April 2011), on 29 August 2011 (applying to supplies made on or after 1 April 2011), by section 240(2) of the Taxation (Tax Administration and Remedial Matters) Act 2011 (2011 No 63).