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Have you had a change in creditable purpose?

Sometimes you may use a property you bought in a way that is different to what you originally planned.

Remember that if you claimed GST credits for property purchases you now use to make input-taxed supplies, you need to report adjustments for this change in creditable purpose in your activity statement.

For example, if you constructed a new residential premise to sell, but then rented it out, you need to make an increasing adjustment on your activity statement. You are required to do this even if you still market the property for sale. You may also need to make an adjustment if you use the property for private purposes.

Adjustments are required for changes in creditable purpose because the GST credit you originally claimed will either have been too much or too little.

You will generally not have to make an adjustment for a change in creditable purpose if:

  • the value of the purchase or importation was $1,000 (GST-exclusive) or less
  • the value of the purchase or importation related to business finance and was $10,000 (GST-exclusive) or less.

Adjustment periods

“Adjustment periods” are the reporting periods in which you have to account for any adjustments in your activity statement.

An adjustment period for a purchase or importation is a reporting period that both:

  • starts at least 12 months after the end of the reporting period you claimed your GST credit in (or would have claimed your GST credit in had the purchase or importation been creditable), and



  • ends on 30 June (or if none of your reporting periods end on 30 June, your reporting period that ends closest to 30 June).

The maximum number of adjustment periods in which you make adjustments depends on the value of the purchase or importation.

Adjustment periods for most purchases and importations

Value of the purchase or importation (GST-exclusive)   Number of adjustment periods

$1,001 to $5,000                                                                             2

$5,001 to $499,999                                                                         5

$500,000 or more                                                                          10

Adjustment periods for purchases or importations that relate to business finance

Value of the purchase or importation (GST-exclusive)     Number of adjustment periods

$10,001 to $50,000                                                                               1

$50,001 to $499,999                                                                             5

$500,000 or more                                                                               10

If you cancel your GST registration, your final reporting period is also an adjustment period for purchases and importations.


Harper Group Pty Ltd Chartered Accountants Frankston Ph 9770 1547

Disclaimer: All information provided in this article is of a general nature only and is not personal financial or investment advice. Also, changes in legislation may occur frequently. We recommend that our formal advice be obtained before acting on the basis of this information.

Michael Sinclair