Value Added Tax Act 1994 section 26A

Disallowance of input tax where consideration not paid

Section 26A requires businesses to repay input tax credits they have claimed if they have not paid their supplier within six months.

• If a business claims input tax credit but does not pay its supplier within six months, it loses the right to that credit for the unpaid portion
• The six-month period runs from the date of the supply or, if later, the date the payment became due
• If payment is made after the six-month deadline, regulations may allow the input tax credit to be restored in whole or in part
• Special rules apply in insolvency situations under section 26AA, which can disapply this clawback requirement