You have prepared your business activity statement, submitted it, and moved on. However, what if there is an error in your lodged business activity statement? It could be something as simple as categorising a transaction in the wrong way, flipping two numbers, or even counting expenses twice. These small mistakes might not seem big, but over time, they can cost you big. You could be losing out on GST credits, overpaying taxes, or even putting yourself at risk of an ATO audit. Let’s understand when you should fix or adjust the BAS mistake.
What is the difference between a mistake and an adjustment?
Before correcting your mistake, you must know whether you are dealing with an adjustment or a mistake.
- A mistake is when you make a mistake at the time of lodgment. It could be classifying a taxable sale as GST-free or you have made a clerical mistake in your calculations.
- On the other hand, an adjustment occurs when your original documents were accurate, but something changed afterwards, such as a customer returning goods, voiding a sale or altering the price. To avoid costly mistakes, it would be better to seek help from professional taxation accountants.
When should you fix a mistake?
Here are some examples you may have made mistakes that should be corrected on time:
- transposition or clerical errors
- categorising a GST-free purchase or sale as taxable
- categorising taxable purchases or sales as GST-free
- counting some purchases twice.
How do you fix BAS mistake?
You are allowed to make corrections in your next BAS or revise the original BAS. Conditions may apply based on whether it’s a debit error or a credit error. Many mistakes related to fuel tax and GST credits can be fixed in your next BAS. If you cannot correct your next BAS, you must lodge a revision. By searching online ‘accountant for small business near me’, you can get help from someone near your area to discuss the mistake you have made, and they can help you correct or adjust that mistake.
- Corrections that affect PAYG withholding
If you are an employer and have to fix your STP reporting, you may also address that the PAYG withholding you reported to the ATO for a previous tax time was too high or too low. To fix this, you can either:
- Revise the previous activity statement for the earlier time to show the right amount. For large withholders, ensure to follow the current process for notifying the ATO regarding the changes to your PAYG withholding liability in an earlier tax time period.
- Carry forward the correction to your reported PAYG withholding for the existing tax period, liable to some limits.
When should you make an adjustment?
When you understand that you need to make an adjustment, you usually report it in the activity statement for your existing reporting time period. Here are some examples of when you should make an adjustment where:
- the sale or purchase price changes
- the sale is cancelled and the goods are returned.
What if you don’t correct BAS mistakes?
If you fail to correct BAS mistakes, you may have to face the following issues:
- Overpaying taxes: You may have to pay tax more than required.
- ATO penalties or audits: If errors are not resolved, you may have to pay penalties to the ATO or face ATO audits.
- Cash flow issues: If you have over-reported GST, you may have to face cash flow issues.
Business activity statement records
You need to prepare records to meet your business activity statement reporting requirements. The information you include in your BAS must be accurate and complete. Maintaining good records will help you meet BAS conditions and claim all the fuel tax and GST credits you are eligible for. You can choose bookkeepers in Melbourne to help you with this.
Conclusion
The blog outlines common BAS mistakes that must be adjusted or corrected on time to avoid paying ATO penalties. Make sure to stay on top of your BAS lodgment and for this, you can also get help from Reliable Melbourne Accountants.