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  • Credit errors

    You can correct a credit error on your current BAS if all of the following conditions apply.

    Credit errors are not subject to value limits.

    You may need to increase your fuel tax credits in your current BAS if you made a credit error. To do this, include the dollar amount of the error to your fuel tax credit amount for that period at label 7D (Fuel tax credit) on your current BAS.

    Credit error time limits

    Error occurring on or after 1 July 2012

    If you made a credit error in a BAS period that started on or after 1 July 2012, you can correct the error on a BAS within the four year period of review, that is, four years from the day after you lodge the BAS in which the error occurred.

    Example 6: Four year period of review

    Peter, a monthly BAS lodger, worked out he made an error in his BAS period ended 30 September 2017. He used the wrong fuel tax credit rate and claimed too much fuel tax credits for that period.

    Because he lodged the BAS on 1 October 2017, Peter can correct that error on a BAS period that starts before 2 October 2021.

    End of example
    Error occurring before 1 July 2012

    If you made a credit error in a BAS period that started before 1 July 2012, you can correct the error in a BAS if you lodge it within four years of the end of the BAS period in which you made the error.

    Example 7: Credit errors made before and after 1 July 2012

    Horatio Inc operate an agriculture business with a GST turnover of $4 million. Horatio Inc determine they have made a number of credit errors (claimed less than they were entitled to) totalling $43,000 in fuel tax credits in BAS lodged since 2007. The breakdown of their credit errors is:

    • $1,000 under claimed for the quarter ended 31 December 2007
    • $22,000 under claimed for the quarter ended 30 September 2010
    • $18,000 under claimed for the quarter ended 30 September 2012
    • $2,000 under claimed for the quarter ended 30 June 2013.

    Horatio Inc would like to correct these credit errors on their BAS for the quarter ended 31 March 2014.

    The time limit for correcting the credit error made on the BAS for the quarter ended 31 December 2007 expired on 31 December 2011. Horatio Inc did not notify us about this error. Therefore, the error cannot be corrected.

    The $22,000 error on the BAS for the quarter ended 30 September 2010 can be corrected on the BAS for the quarter ended 31 March 2014 as it was lodged within four years from the end the September 2010 quarterly BAS period.

    The errors made on the BAS for the quarters ending 30 September 2012 and 30 June 2013, totalling $20,000, can also be corrected on the BAS for the quarter ended 31 March 2014 as they were made within the four year period of review.

    End of example

    Debit errors

    You can correct a debit error on your current BAS if all the following conditions apply for each debit error.

    You may need to decrease your fuel tax credits in your current BAS if you made a debit error. To do this, include the dollar amount at label 7C (Fuel tax credit over claim) on your current BAS.

    If you do not meet the above conditions, you must correct some or all of the error on the original BAS on which the error occurred – penalties and interest charges may apply. You can do this online via the Business Portal or phone us to get a revision form.

    See also:

    Debit error time limits

    Time limits apply for the correction of a debit error from the time the debit error occurred (not when it was discovered).

    You can correct a debit error on your current BAS if it is within the debit error time limit that corresponds with your current GST turnover in the table below. Otherwise you must correct the error on the original BAS.

    Table 2: Time limits for correcting debit errors

    Current GST turnover

    Debit error time limit

    Less than $20m

    The debit error must be corrected on a BAS that is lodged within 18 months of the due date of the BAS in which the error was made.

    $20m or more

    The debit error must be corrected on a BAS that is lodged within 12 months of the due date of the BAS in which the error was made.

    See also:

    • GSTR 2001/7 Goods and services tax: meaning of GST turnover, including the effect of section 188-25 on projected GST turnover

    Example 8: Error within the debit error time limit

    EX Pty Ltd have a current GST turnover of $18 million and lodge their BAS monthly. While preparing its July 2018 BAS, EX Pty Ltd discovers a debit error of $5,000 on the BAS they lodged for June 2017.

    EX Pty Ltd can only correct the error on a BAS lodged within 18 months of the due date of the BAS in which the error was made. The due date for lodging the June BAS was 21 July 2017. 18 months from that date is 21 January 2019.

    End of example

     

    Example 9: Debit error is outside the debit error time limit

    Jiesi has a GST turnover of less than $20m and lodges her BAS quarterly. In December 2017, whilst preparing her BAS for the quarter ended 31 December 2017, she discovers a debit error made on her BAS for the quarter ended 31 March 2016.

    Jiesi can only correct the debit error on a BAS that she lodges within 18 months from the due date of the March 2016 BAS. The due date for the March 2016 BAS was 28 April 2016 so she has until 28 October 2017 to correct the debit error.

    Jiesi cannot correct the debit error on her BAS for the quarter ended 31 December 2017. She must correct the error by revising the original BAS on which the error occurred – penalties and the general interest charge may apply.

    End of example

    Debit error value limits

    You can correct a debit error on your current BAS if the net sum of the debit errors is within the debit error value limit that corresponds with your current GST turnover in the table below:

    Table 3: Debit error value limits

    Current GST turnover

    Debit error value limit

    Less than $20m

    Less than $10,000

    $20m to less than $100m

    Less than $20,000

    $100m to less than $500m

    Less than $40,000

    $500m to less than $1b

    Less than $80,000

    $1b or more

    Less than $450,000

    The net sum of the debit errors is the sum of one or more debit errors less the sum of any credit errors that results in an overall debit error. You can offset your credit errors against your debit errors for the purposes of working out whether you fall within the relevant debit error value limit.

    Different guidelines apply for single and multiple errors.

    • If you have a single debit error to correct on your current BAS, you can correct that error if it is within the relevant value limit. If the error exceeds the value limit you will need to revise the original BAS in which the error was made.
    • If you have multiple debit errors to correct on your current BAS, you can correct the net sum of the debit errors up to the relevant debit error value limit. If the net sum exceeds the debit error, you will need to revise the original BAS on which the debit errors were made for the amounts that exceed the debit error value limit.
    • If you have multiple debit and credit errors to correct on your current BAS, you can correct the net sum of the debit errors (debit errors less credit errors) up to the relevant value limit – you will need to revise the original BAS on which the debit errors were made for the amounts exceeding the debit error value limit.

    You cannot correct the amount that exceeded the debit error value limit on a subsequent BAS. You should correct the remaining debit error on the original BAS.

    Example 10: Net sum of debit errors exceeds the debit error value limit

    Tim’s Mining has a current GST turnover of $5 million and lodges its BAS quarterly. In August 2017, Tim's Mining does an end-of-year review and identifies two fuel tax credit debit errors made in the previous year:

    • a debit error of $7,000 that occurred in the BAS for the quarter ended 30 September 2016
    • a second debit error of $5,000 that occurred in the BAS for the quarter ended 30 September 2016.

    The net sum of the debit errors is $12,000 ($7,000 + $5,000), which exceeds the debit error value limit for Tim's Mining of $10,000. Tim’s Mining can only correct the debit errors up to $10,000 in its current BAS.

    Tim’s Mining decides to correct the first error of $7,000 and $3,000 (out of the $5,000) of the second error (assuming all other conditions for correcting a debit error are met). To do this, it includes $10,000 at label 7C on its current BAS.

    Tim's Mining must then correct the balance of $2,000 of the second error by revising the original BAS in which the error was made, that is, the BAS for the quarter ended 30 September 2016.

    Alternatively, Tim’s Mining may choose to correct one or both errors in the BAS for the quarter ended 30 September 2016 to decrease its fuel tax credit amount by $12,000. This could increase any penalties and interest charges that may apply.

    End of example

     

    Example 11: Net sum of debit errors is within the debit error value limit

    Joan's Earthmoving lodges their BAS quarterly and has a current GST turnover of $10 million. On 11 April 2018, while preparing the BAS for the quarter ended 31 March 2018, Joan's Earthmoving discovers the following errors.

    Summary of Joan’s Earthmoving errors

    BAS period ending

    Error

    Debit error

    Credit error

    December 2016

    Clerical transcription error

     

    $10,000

    March 2017

    Over claimed fuel tax credits

    $13,000

     

    June 2017

    Clerical transcription error

     

    $5,000

    September 2017

    Did not include decreasing fuel tax credit adjustment

    $6,000

     

    Total

     

    $19,000

    $15,000

    Joan's Earthmoving wants to correct these errors in their quarterly BAS ended 31 March 2018. Joan's Earthmoving determines they can correct the credit errors in this BAS as they are both within the four year period of review.

    Joan's Earthmoving determines their debit errors meet all the required conditions. They also need to work out whether each debit error, as part of the net sum of debit errors, is within the debit error value limit of $10,000.

    The net sum of the debit errors is $4,000 (that is, $19,000 − $15,000), which is below the relevant debit error value limit ($10,000). Joan's Earthmoving can also correct both of the debit errors by taking them into account on the BAS for the quarter ended 31 March 2018 (that is, the errors relating to the over-claimed fuel tax credits of $13,000 and the increasing adjustment of $6,000).

    End of example
    Debit error value limits for GST groups, branches and joint ventures

    For GST groups, branches and joint ventures, the debit error value limits apply to the entity that lodges the BAS and is entitled to claim fuel tax credits. That is, it applies to the representative member of the GST group (rather than each individual member) and the GST joint operator of a GST joint venture.

    If you are subject to compliance activity

    A compliance activity is an examination of your fuel tax credit affairs undertaken by us and includes reviews, audits, verification checks, record-keeping reviews/audits and similar activities.

    If you receive advice from us by phone or in writing about our intention to conduct a compliance activity, you cannot correct an error in your current BAS:

    • that is the subject matter of that compliance activity
    • arising in a reporting period that is subject to the compliance activity.

    If you find errors, it is in your best interest to voluntarily disclose them. If you tell us about your error, it will be taken into account when we consider penalties.

    A compliance activity is completed when you receive a notice of assessment or notice of amended assessment, or when we tell you that the examination has been finalised.

    Example 12: Fuel tax credit error cannot be corrected due to related compliance activity

    In June 2018, we notified Grote Construction that we were conducting a review of its past fuel tax credit claims for the company’s on-road activities. In preparation, Grote Construction undertook its own review of both its on-road and off-road activities. Grote Construction discovered that it made a transposition error when calculating the amount of fuel acquired for its on-road activities. As this error relates to the matter we were reviewing, Grote Construction could not correct the error in their current BAS. The error must be corrected in the original BAS where the error was made. As compliance review activity was being undertaken, it was in the best interest to voluntarily disclose the error.

    End of example

     

    Example 13: Fuel tax credit error can be corrected despite compliance activity

    In March 2018, we notified Broome Agricultural (turnover less than $10m) that we were conducting a general review of its fuel tax credit affairs for each of the monthly BAS periods ending 31 January 2017 to 31 January 2018. Broome Agricultural also conducted its own review and discovered an error made in working out its fuel tax credit entitlement for the BAS period ending 30 November 2016. As the error was made in an earlier BAS period and was not subject to compliance activity (and was not related to a matter subject to review), Broome Agricultural could correct the error in their current BAS, if they met the other conditions for correcting the error specified in this guide.

    End of example

    Recklessness and intentional disregard of the law

    You cannot correct a debit error if the error is due to recklessness or intentional disregard of the fuel tax law.

    Recklessness is behaviour that falls significantly short of the standard of care expected of a reasonable person in the same circumstances. It is gross carelessness.

    Intentional disregard of the law is something more than reckless disregard of, or indifference to, a tax law. The intention is a critical element. That is, a person must have understood the effect of the law and how it operates and makes a deliberate choice to ignore the law.

    Example 14: Intentional disregard of the law

    Bracely Co is facing a cash-flow problem and deliberately over claimed its fuel tax credit amount by $10,000 when lodging its monthly BAS for November 2018.

    As the debit error (over claiming fuel tax credits) resulted from Bracely Co intentionally disregarding fuel tax credit law, they cannot correct the error on their current BAS. Bracely Co must correct the debit error on the original November 2018 BAS – penalties and general interest charges (GIC) may apply.

    End of example

    See also:

    • MT 2008/1 Penalty relating to statements: meaning of reasonable care, recklessness and intentional disregard
      Last modified: 28 Feb 2019QC 18882