Correcting GST Mistakes

When completing your activity statement we may discover a mistake has been made or a transaction was left out on a previous activity statement. While the normal way to correct these mistakes is to revise the previous activity statement, in some cases we can just correct it on a later activity statement.

Corrections that decrease your GST to be paid

If you discover you made other mistakes on an earlier activity statement that meant you paid too much GST, you may be able to make a correction on a later activity statement. Subject to the correction limits outlined in the table below, you can make these corrections on your current activity statement or on any later one. These corrections may be needed where you:

  • made clerical mistakes, for example, double counted your taxable sales,
  • incorrectly recorded a GST-free sale as taxable on an earlier activity statement, or
  • mistakenly classified GST-free sales as taxable, that is, you incorrectly included GST in the price charged to a customer. In this case, you need to reimburse the overcharged amount to all customers - including customers that are not registered for GST - before you make the correction

 

Corrections that increase your GST to be paid or decrease your input tax credits

If you discover you made mistakes or left things out on an earlier activity statement that meant you paid too little GST or claimed too much input tax credit, you may be able to make a correction on a subsequent activity statement. Corrections are subject to limits on the timing of the correction and on the amount of the correction outlined in the tables below. You will only be able to correct genuine mistakes. You may need corrections where you have:

  • made clerical mistakes, for example, double counted some creditable purchases or did not include some taxable sales;
  • incorrectly recorded a taxable sale as GST-free on an earlier activity statement; or
  • Mistakenly classified taxable sales as GST-free.
  • Where a mistake or omission relates to an earlier activity statement that falls outside the time or correction limits detailed below, you will need to revise that earlier activity statement.

Time Limits

You can make corrections to:

  • Increase your GST to be paid, or
  • Decrease your input tax credits.

These can be made on your next activity statement only if the errors fall within the time limits outlined in the following table. The time limits correspond to the size of your business.

If you are a small business that pays GST by instalments for a full year you will account for GST on an annual basis and report GST in an annual GST return. Where you make an error in that return, subject to the correction limits outlined below, you will be able to correct that error in your next annual GST return. Correcting your mistakes in this way may inflate your notified instalment amount in the following year.

Where the mistakes from your previous activity statements occur outside the appropriate time limit, you must revise each of your original activity statement that the mistakes occurred in.

Overview

You can make corrections to:

  • increase your GST to be paid
  • decrease your GST to be paid
  • decrease your input tax credits, or
  • increase your input tax credits (only if this is a result of a mistake this guide applies to, that is, it is not a delayed attribution of input tax credits).

 

Correction Limits

You can make the above corrections on your next activity statement, only if their net effect (that is the total GST effect of all the errors) is within the correction limits outlined in the following table. The correction limits correspond to the size of your business.

Correction limits are the net effect of the total of all errors occurring in earlier activity statements. They are the maximum amount of corrections you can make on a later activity statement. They are not determined on a ‘per activity statement’ or ‘per mistake’ basis.

Where the net effect of mistakes from your earlier activity statements exceeds the appropriate limit, you must revise your original activity statements that the mistakes occurred in.

In some cases each of your original activity statements will need to be revised. In other cases you may only need to revise some of your original activity statements as this may be sufficient for you to bring the net effect of your remaining mistakes below the appropriate level.

Record Keeping

If you correct mistakes on your activity statement, you should keep a note to record the tax period(s) when the mistakes were made and the activity statement they were corrected on. Records and other relevant information should also be kept to explain the correction

Revising an Earlier Activity Statement

If you need to revise an earlier activity statement you can do this via the client’s business portal or the BAS service provider portal. If the client is not set up on the portal you should phone 13 28 66 and ask us to send you a revised activity statement to complete.

Revising an earlier activity statement may mean that you are liable to interest where you have underpaid amounts of GST.

Topics: Compliance