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Is the entity, a supplier of goods and services, required to make an increasing adjustment under subsection 138-5(1) of the A New Tax System (Goods and Services Tax) Act 1999 (GST Act), for the assets it acquired prior to the cancellation of its goods and services tax (GST) registration?

Yes, the entity is required to make an increasing adjustment under subsection 138-5(1) of the GST Act for the assets it acquired prior to the cancellation of its GST registration.

The entity is a supplier of goods and services. The entity has cancelled its GST registration. The entity is not required to be registered for GST and was registered for GST for at least 12 months prior to the cancellation. The entity is entitled to claim input tax credits on assets it acquired prior to the cancellation of its GST registration. The last adjustment period for the acquisition of the assets did not end before the cancellation of the GST registration took effect.

The cancellation was not a result of the situations outlined in section 138-17 of the GST Act.

Subsection 138-5(1) of the GST Act provides that the entity has an increasing adjustment for cessation of registration if: • its registration is cancelled; and • immediately before cancellation takes effect, its assets include anything in respect of which it was, or is, entitled to an input tax credit.

The entity is required to make an increasing adjustment under subsection 138-5(1) of the GST Act, for the acquisition of assets prior to the cancellation of its GST registration. [Note: The amount of the adjustment for each thing referred to in paragraph 138-5(1)(b) of the GST Act is: 1/11 x Actual application of the thing x Applicable value where: The applicable value is: • the GST inclusive market value of the thing immediately before the cancellation takes effect; • if you were, or are, entitled to an input tax credit for acquiring the thing- the amount of the consideration that you provided, or were liable to provide, for your acquisition of the thing, but only if the amount is less than that value; or • if you were, or are, entitled to an input tax credit for importing the thing - the cost to you of acquiring or producing the thing (plus the GST paid on its importation), but only if the amount is less than that value.]