Just as a Tax Invoice is a special type of invoice that meets specific requirements in the GST Act; an adjustment note is a special type of credit note that again meets specific requirements in the GST Act. It allows the parties to validly adjust the GST they have accrued or reported on a previous tax invoice.
Adjustment notes are needed where there is an adjustment event of more than $75. Essentially, an adjustment event is an event which:
- cancels a previous supply or acquisition; or
- alters the price paid or received by the parties; or
- causes the supply or acquisition to become, or stop being, a taxable supply or creditable acquisition.
Where an adjustment event results in the previously reported GST no longer being correct, an adjustment will arise. The adjustment will either be an increasing adjustment (which means it increases a party’s GST liability) or a decreasing adjustment (which means it decreases a party’s GST liability).