Before we discuss which GST errors cannot be fixed, you must know what a GST error is, how to correct it, and the types of GST errors.
What are GST Errors?
A GST error refers to a mistake related to the GST credit, the amount of GST, or a GST adjustment. You might have made a mistake when working out your GST net amount on your BAS that may result in you:
- lodging or paying too much GST (credit error)
- lodging or paying too little GST (debit error).
A GST error is not a mistake related to wine equalisation tax, fuel tax credits, or luxury car tax. You can also search online for the ‘best tax accountant near me’ to avoid making GST errors.
How to Correct GST Errors
Making a mistake when reporting GST on an earlier BAS can allow you to correct that mistake on a later BAS if you meet certain requirements. Correcting a GST error on a later BAS is easier than revising an earlier period. Revising an earlier period that contains an error can result in a general interest charge (GIC) or penalties. You can only make a correction to a GST error in a later BAS if the later BAS is filed during the period of review for the earlier period in which the mistake was made.
When You Can’t Correct An Error
You won’t be able to correct a debit or credit error on a later BAS if:
- The GST error is related to or was made during a reporting time period that is liable to a compliance activity
- You’ve corrected the GST error in another reporting period
- You’ve already made a later BAS lodgment.
To avoid making GST errors, you must have accurate GST records, which you can achieve by organising everything on time. You can also seek a bookkeeping service Melbourne to ensure you stay updated regarding the GST records you need to keep.
You are liable for compliance activity: A compliance activity is done by the ATO to examine your GST matters, which includes:
- reviews
- audits
- verification checks
- record-keeping reviews and audits, and
- similar activities.
After receiving advice from the ATO for conducting a compliance activity, you won’t be able to correct a GST error that is the primary matter of the compliance activity or mistakes arising in a reporting period that is liable for the compliance activity unless the ATO notifies you in writing that you can correct the mistake in a later BAS.
If you find such GST mistakes, you need to disclose them. If you inform the ATO about your GST error, it will be considered when they consider the application of a penalty. A compliance activity is completed after receiving a notice of assessment or notice of amended assessment, or when the ATO informs that the examination has been completed.
If you have corrected the GST mistake in another reporting period: You are not allowed to correct a GST error more than once. For instance, if you revise the earlier time period in which you made the GST error, or if you have already corrected the GST mistake in another reporting period, you won’t be able to further correct the mistake on a later BAS. This includes the situation where you only partially correct a debit mistake because the relevant debit error value limit was surpassed. You won’t be able to correct the amount that surpassed the debit error value limit on a subsequent BAS.
Revising a later lodged BAS: You can’t revise a BAS for a later tax time that you have already lodged to correct a GST error from an earlier tax time period. You can only make corrections to a GST error in a BAS that you haven’t yet lodged. For instance, if you made a mistake in your October BAS and have already filed your February BAS, you won’t be able to revise the February BAS to include the correcting information. You may have to wait until you file your April BAS to correct the mistake (if it meets the requirements of correcting a GST error).
Conclusion
In this blog, we’ve shared common reasons why you won’t be able to correct a debit or credit error on a later BAS. If you still find it confusing, you can get in touch with Reliable Melbourne Accountants.