Q: Leia Caldwell, a property developer with GST, initially intended to sell 10 townhouses as new residential premises, making each sale taxable for GST. She claimed $300,000 in input tax credits for construction materials. Later, she decided to lease three townhouses instead of selling them. Since she's now renting them out as residential properties, they're considered input taxed supplies, meaning she can't claim input tax credits for them.
To correct this, Leia needs to adjust her input tax credits on her BAS. According to the GST Act, adjustments are needed when input tax credits are claimed incorrectly. The adjustment is calculated based on the full input tax credit amount multiplied by the percentage of the change in intention. In Leia's case, it's $90,000.
This adjustment needs to be made over 10 adjustment periods starting from the BAS for the period ending on June 30, 2017, as specified in the GST Act.
If you need help, contact Tax Ideas Accountants & Advisers at +61 2 83181545 or book an appointment on our live calendar.