To correct a GST error, you include the correction amount at boxes 1A or 1B. If the net result of the error(s) is that you have paid too little GST, include the amount at 1A. Alternatively, if the net result is that you have overpaid GST, include the amount at 1B.
If you correct a GST error on a later BAS, keep a note to record the reporting period when the error was made and the BAS it was corrected on. You must also keep records and other relevant information to explain the correction.
Example: rules for correcting GST errors
Theo Pty Ltd has a current GST turnover of less than $20 million. While preparing its BAS for a March 2024 quarterly reporting period (which is yet to be lodged), it discovers that it failed to claim a GST credit for a purchase it was entitled to claim in June 2021 reporting period.
Theo Pty Ltd also discovers that it made 2 GST errors in working out its net amount for earlier reporting periods.
The first GST error is a $15,000 debit error made in working out the net amount for the December 2022 reporting period. Theo Pty Ltd lodged its December 2022 BAS on 28 February 2023.
The second GST error is a $7,000 credit error relating to a decreasing GST adjustment. Theo Pty Ltd forgot to take into account the GST adjustment in working out its net amount for the June 2021 reporting period. Theo Pty Ltd lodged its September 2022 BAS on 28 October 2022.
Theo Pty Ltd is not subject to any compliance activity at the time of preparing its BAS for the March 2024 reporting period and has not previously taken the GST errors into account.
As the GST credit that Theo Pty Ltd failed to claim in the June 2021 reporting period doesn't fall within the definition of a GST error, it doesn't need to work out whether conditions for correcting a credit error are satisfied. Theo Pty Ltd can claim the GST credit in the March 2024 reporting period.
Theo Pty Ltd works out whether it can correct the GST errors in its March 2024 quarterly reporting period that will be lodged before its due date on 28 April 2024, as follows:
|
Rules for correcting GST errors |
GST error made: $7,000 credit error September 2022 reporting period |
GST error made: $15,000 debit error December 2022 reporting period |
|---|---|---|
|
Does the error relate to an amount of GST, GST credit or GST adjustment? |
Yes GST adjustment error |
Yes Amount of GST |
|
At time of lodging the later BAS to correct the GST error, do both of the following apply? The GST error:
|
Yes |
Yes |
|
The GST error wasn't taken into account in working out the net amount for another reporting period? |
Yes – not taken into account |
Yes – not taken into account |
|
Will the BAS for the later reporting period be lodged during the period of review of the earlier reporting period? |
Yes The period of review for the September 2022 quarterly period ends on 29 October 2026. The later BAS which corrects the error will be lodged on or before 28 April 2024. |
Yes The period of review for the December 2022 quarterly period ends on 29 February 2027. The later BAS which corrects the error will be lodged on or before 28 April 2024. |
|
Will the error be corrected in a BAS that is yet to be lodged? |
Yes |
Yes |
|
If the GST error was a debit error, was the error caused by recklessness or intentional disregard? |
Not applicable – credit error |
No |
|
Are the debit errors corrected within the applicable debit error time limit? |
Not applicable – credit error |
Yes The lodgment for the March 2024 BAS will be done by 28 April 2024 which is within 18 months of the due date for lodgment of the December 2022 BAS (that is, 28 February 2023). |
|
Is the net sum of the debit errors within the applicable debit error value limit? |
Not applicable – credit error |
Yes Net sum of the debit errors is $8,000 ($15,000 debit less $7,000 credit), which is below the applicable debit error value limit of $12,500. Theo Pty Ltd can't offset the GST credit it failed to claim in June 2021 as it is not a credit error. |
Therefore, in its BAS for the March 2024 quarterly reporting period Theo Pty Ltd can correct both GST errors (the credit error and the debit error) and claim the GST credit that it failed to include in the June 2021 reporting period.
To correct the errors in the March 2024 quarterly reporting period, Theo Pty Ltd adds $8,000 at box 1A.
End of example