When an error cannot be corrected on your current BAS
You cannot correct a credit or debit error on your current BAS if any of the following occurs:
You cannot correct a debit error on your current BAS if the debit error was as a result of recklessness or intentional disregard of a WET law.
If you are subject to compliance activity
A compliance activity is an examination of your tax affairs undertaken by us and includes reviews, audits, verification checks, record-keeping reviews or audits and similar activities.
If you receive advice 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 a 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 1: WET error cannot be corrected due to compliance activity
In June 2016, we notified Liquid Trading that we are conducting a review of their past wine transactions. As a result, Liquid Trading undertakes a review of its transactions and discovers that WET errors were made treating particular sales of wine as under quote. As the errors relate to a matter that we are reviewing, Liquid Trading cannot correct the error in a later BAS. They must correct the error in the original BAS where the error was made.
End of example
Example 2: WET error can be corrected despite compliance activity
In March 2016, we notified Big Co that we are conducting a general review of Big Co's WET affairs for each of the monthly reporting periods ending 31 January 2016 to 28 February 2016. Big Co also conducts its own review and discovers a WET error made in working out its net amount for the December 2015 reporting period. As the WET error is made for an earlier reporting period that is not subject to compliance activity (and is not related to a matter that is subject to review), Big Co can correct the error in a later BAS, if the other conditions are satisfied.
End of example
If you have corrected the WET error in another reporting period
You cannot correct a WET error more than once. For example, if you revise the earlier BAS in which the WET error was made, or if you have already corrected the WET error in another reporting period, you cannot then correct the error on your current BAS.
This includes if you partially correct a debit error because the relevant debit error value limit was exceeded. You cannot correct the amount that exceeded the debit error value limit on a subsequent BAS.
Example 3: A debit error that was previously partially corrected
Edgar's Cellar has a current GST turnover of less than $20 million. When preparing its December 2015 quarterly BAS, Edgar's Cellar discovered that it made a debit error of $20,000 on an earlier BAS. Edgar's Cellar corrects the debit error up to the debit error value limit amount of $16,000 on its December 2015 quarterly BAS. It cannot correct the excess amount of $4,000 on its BAS for the quarter ending 31 March 2016. Edgar's Cellar must correct the debit error relating to the excess amount of $4,000 by revising the earlier BAS.
End of example
Recklessness or intentional disregard of a WET law
You cannot correct a debit error if the error is a result of recklessness or intentional disregard of a WET 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 made a deliberate choice to ignore the law.
Example 4: Intentional disregard of a WET law
XY Co is facing a cash flow problem and deliberately under-reports the WET on its sales by $10,000 when lodging its monthly BAS for November 2014.
As the debit error (the under-reporting of WET payable) resulted from XY Co intentionally disregarding the WET law, they cannot correct the error on their current BAS. XY Co must correct the debit error on the original November 2014 BAS – penalties and general interest charges (GIC) may apply
End of example
- MT 2008/1External Link Penalty relating to statements: meaning of reasonable care, recklessness and intentional disregard