There are two types of GST errors you can make – a credit error or a debit error.
Credit error
You make a credit error if you make an error in working out your GST net amount that results in you reporting or paying too much GST for the reporting period.
Examples of credit errors include:
- reporting a GST sale twice
- overstating the GST on sales (for example, reporting a larger figure for GST on sales than the correct amount) and the refund of the overstated GST is not restricted.
- omitting or understating a decreasing GST adjustment or overstating an increasing GST adjustment.
You can correct a credit error on a later BAS if it is within the credit error time limit. Credit errors are not subject to value limits.
For more information on correcting GST errors, see LI 2023/32 A New Tax System (Goods and Services Tax) (Correcting GST Errors) Determination 2023
Credit error time limit
You can correct a credit error on a later BAS that is lodged within the period of review for the earlier reporting period.
The period of review starts on the day you lodge your BAS and ends four years and one day later.
If a credit error relates to GST credits, there is an additional time limit. You cannot correct an error to claim additional GST credits where the 4 year time limit for claiming those GST credits has expired.
Example: 4-year period of review
ABC Ltd, a business that lodges monthly BAS, made a GST error in the September 2022 reporting period that resulted in an overstatement of its assessed net GST amount for that period. The BAS was lodged and the net amount assessed on 3 October 2022. ABC Ltd can correct that GST error on a BAS if it lodges that BAS on or before 4 October 2026.
End of exampleDebit error
You can make a debit error if you make an error in working out your net amount that results in you reporting or paying too little GST for the reporting period. Examples of debit errors include:
- failing to include GST on a taxable sale
- understating the GST on sales (for example, reporting a lesser amount for GST on sales, rather than the correct amount)
- overstating GST credits (for example, claiming GST credits for a purchase twice)
- omitting or understating an increasing GST adjustment or overstating a decreasing GST adjustment.
You can correct a debit error on a later BAS if the following conditions apply for each debit error:
- the debit error is within the debit error time limit
- the net sum of the debit errors is within the debit error value limit
- the debit error is not as a result of recklessness or intentional disregard of a GST law.
Debit error time limit
Time limits apply for the correction of a debit error from the time the debit error occurred (not when it was discovered).
You can only correct a debit error on a later BAS if it is lodged within the debit error time limit that corresponds with your current GST turnover as shown in the table below.
Current GST turnover |
Debit error time limit |
|---|---|
Less than $20 million |
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. |
$20 million 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. |
If the debit error time limit has expired, you need to revise the period that contains the error if the period of review has not yet expired.
For more information on GST turnover, see GSTR 2001/7 Goods and services tax: meaning of GST turnover, including the effect of section 188-25 on projected GST turnover.
Example: Debit error is within the debit error time limit
While preparing its October 2023 BAS, X Pty Ltd (a monthly lodger with current GST turnover below $20 million) discovers a debit error of $5,000 on its BAS lodged for the September 2022 reporting period.
The debit error can only be corrected on a BAS that is lodged within 18 months of the due date for lodging the BAS for the reporting period in which the error was made. The due date for lodging the BAS in which the debit error was made was 21 October 2022. Eighteen months from that date is 21 April 2024.
If the debit error meets all other conditions, X Pty Ltd can correct the $5,000 error on its October 2023 BAS, which it lodges on 21 November 2023, as this is within 18 months of the due date for lodgment of the BAS for the reporting period in which the error was made.
End of example
Example: Debit error is outside the debit error time limit
Jiesi has a current GST turnover of less than $20 million and lodges her BAS quarterly. She lodges her BAS for the September 2023 reporting period late, lodging it on 12 December 2023 instead of by 28 October 2023. In preparing the September 2023 BAS she discovers a debit error made on her BAS for the March 2022 reporting period.
The debit error can only be corrected on a BAS that is lodged within 18 months of the due date for lodging the BAS for the reporting period in which the error was made, which was 28 April 2022. Eighteen months from that date is 28 October 2023.
If Jiesi had lodged her September 2023 BAS by 28 October 2023 (the due date) she could have corrected the debit error. However, as she lodged it on 12 December 2023 (after the due date), she is outside the debit error time limit and cannot correct the error in her September 2023 BAS.
End of exampleDebit error value limit
You can correct a debit error to the extent that the net sum of the debit errors is within the debit error value limit that corresponds with your current GST turnover, as shown in the table below.
The net sum of the debit errors is the sum of one or more debit errors less the sum of any credit errors that you include on the same BAS.
Current GST turnover |
Debit error value limit |
|---|---|
Less than $20 million |
Less than $12,500 |
$20 million to less than $100 million |
Less than $25,000 |
$100 million to less than $500 million |
Less than $50,000 |
$500 million to less than $1 billion |
Less than $100,000 |
$1 billion and over |
Less than $560,000 |
If the net sum of the debit errors exceeds your debit error value limit, you can correct the debit error or errors up to the value limit and revise the balance in the period in which the error(s) was made. You cannot correct the amount that exceeds the debit error value limit on a subsequent BAS.
Single debit error
If you have a single debit error to correct, you can correct that error on a later BAS up to the relevant debit error value limit. You will need to revise the period in which the debit error was made for the amount that exceed the debit error value limit.
Example: A debit error that exceeds the debit error value limit
Greg's Garage has a current GST turnover of less than $20 million. When preparing its December 2023 quarterly BAS, Greg's Garage discovered that it made a debit error of $15,000 in working out their net amount on an earlier BAS. Greg's Garage is within the debit error time limit and corrects the debit error up to the debit error value limit amount of $12,500 on its December 2023 quarterly BAS. It cannot correct the excess amount of $2,500 on its next BAS (the quarter ending 31 March 2024). Greg's Garage must correct the debit error relating to the excess amount of $2,500 by revising the earlier period.
End of exampleMultiple debit errors
If you have multiple debit errors to correct, you can correct the total amount of the debit errors on a later BAS up to the relevant debit error value limit. You will need to revise the earlier periods in which the debit errors were made for any amounts that exceed the debit error value limit.
Example: Net sum of the debit errors exceeds the debit error value limit
Serge's Auto Pty Ltd has a current GST turnover of $5 million and lodges its BAS quarterly. As part of its year-end review for the 2024 income year (conducted at the end of August 2024), it identifies two debit errors both made in the September 2023 reporting period, one for $9,000 and one for $5,000.
The net sum of the debit errors ($9,000 + $5,000 = $14,000) exceeds the relevant debit error value limit of $12,500. Serge's Auto Pty Ltd can only correct the debit errors up to $12,500 in a later reporting period. Serge's Auto Pty Ltd decides to correct the first debit error of $9,000 and $3,500 out of the $5,000 of the second debit error (assuming all other conditions for correcting a debit error are satisfied) in its September 2024 BAS.
The balance of $1,500 from the second debit error must then be corrected in the earlier reporting period in which the error was made. That is, Serge's Auto Pty Ltd must revise the September 2023 reporting period to increase its assessed net amount by $1,500.
Alternatively, Serge's Auto Pty Ltd may choose not to correct one or both of the debit errors in a later BAS and revise the September 2023 reporting period to increase its assessed net amount by the relevant amount.
End of exampleMultiple debit and credit errors
If you have multiple debit and credit errors to correct on a later BAS, you offset the sum of the debit errors by the sum of the credit errors to work out the net sum of the debit errors. You can correct the net sum of the debit errors up to the relevant value limit. You will need to revise the earlier period in which the debit errors were made for any amounts exceeding the debit error value limit.
Example: Net sum of the debit errors is within the debit error value limit
Mikaela's Tea House has a current GST turnover of $10 million and lodges monthly BAS. On 11 November 2023, while preparing the BAS for the October 2023 period Mikaela discovers the following GST errors:
Reporting period |
GST error |
Debit error |
Credit error |
|---|---|---|---|
December 2020 |
Double counted taxable sales |
- |
$10,000 |
September 2022 |
Over-claimed GST credits |
$13,000 |
- |
December 2022 |
Clerical error, transcribing error |
- |
$5,000 |
March 2023 |
Didn't report increasing GST adjustment |
$6,000 |
- |
Total |
- |
$19,000 |
$15,000 |
Provided the debit errors meet all the other conditions, Mikaela needs to work out whether the net sum of the debit errors is within the debit error value limit of $12,500.
As she is correcting the two credit errors on the same BAS as the debit errors, she calculates that the net sum of the debit errors is $4,000 (that is, $19,000 – $15,000). This is below the relevant debit error value limit ($12,500), so Mikaela's Tea House can correct both of the debit errors (that is, the over-claimed GST credits of $13,000 and the increasing GST adjustment of $6,000) on the October 2023 BAS.
Example: Net sum of the debit errors is not within the debit error value limit
While preparing its monthly BAS for the October 2023 reporting period Ozco Ltd, which has a current GST turnover above $1 billion, discovers two GST errors made in working out its net amount for earlier reporting periods. One is a credit error for $1.5 million and the other a debit error for $2.25 million.
The net sum of the net debit errors is $750,000 ($2.25 million debit error less $1.5 million credit error) and exceeds the relevant debit error value limit of $560,000. Ozco Ltd can only correct the debit errors up to a net value of $560,000 in a later reporting period. The remaining $190,000 ($750,000 - $560,000) cannot be corrected in a later period.
Ozco Ltd corrects the credit errors and $2.06 million of the debit error on its October 2023 monthly BAS and will need to revise the earlier period in which the debit error occurred for the excess amount of $190,000.
End of exampleGST groups
The debit error value limit applies to the entity that lodges the BAS and is liable to pay the GST or is entitled to the GST refund. For example, 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.
Example: GST groups
Danielle Pty Ltd, Joe Pty Ltd and JC Pty Ltd form part of a GST group that has a current GST turnover of less than $20 million. Danielle Pty Ltd is the group representative and lodges the group's BAS on a monthly basis. On 31 October 2023, the tax agent for the group undertook the yearly reconciliation for the group's BAS and income tax returns for the 2023 financial year. The tax agent noted that all the group members failed to charge GST on one of the products they sell, resulting in a net sum of the debit errors of $15,000. The relevant debit error value limit for the group is $12,500 (not $12,500 for each entity). Danielle Pty Ltd can correct debit errors up to $12,500 in a later BAS and will need to revise the relevant reporting periods that contain the debit errors relating to the $2,500 excess amount over the debit error value limit.
End of exampleRecklessness or intentional disregard of a GST law
You cannot correct a debit error if the error is a result of recklessness or intentional disregard of a GST 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: Intentional disregard of a GST law
DD Co is facing a cash flow problem and deliberately under-reports the GST on its sales by $12,500 when lodging its BAS for the current reporting period.
As the debit errors (the under-reporting of GST payable) result from DD Co intentionally disregarding the GST law, the errors cannot be corrected on a later BAS.
End of example