If a person claimed GST credits for property purchases they now use to make input-taxed supplies, they have to report adjustments for this change in creditable purpose in their activity statement.
A person needs to make an increasing adjustment on their BAS if they had purchased a property sell but now are renting it out. If they still market the property for sale then have to do this. If they use the property for private purposes an adjustment may be needed.
Generally an adjustment will not be needed 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.
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 a taxpayer claimed a GST credit in (or would have claimed had the purchase or importation been creditable), and
- ends on 30 June (or, if none of their reporting periods end on 30 June, their reporting period that ends closest to 30 June).
Reference: Tax & Super Australia. Have your clients had a change in creditable purpose.