Making changes to your GST liability
From time to time, you may need to change your net GST liability for a reporting period.
You will need to change your business activity statement when:
When to make an adjustment
Adjustments are necessary where subsequent events mean that the GST payable or credit attributed in a previous tax period becomes incorrect.
You will need to make an adjustment if:
- something happens that changes the price of a sale or purchase (for example, you provide a rebate to a customer)
- a taxable sale you make, or a purchase for which you can claim a GST credit, is cancelled
- you write-off or recover a bad debt
- your actual use of a purchase for private purposes or to make input-taxed sales differs from your intended use (this only applies if the GST-exclusive value of the purchase is more than $1,000)
- you make or receive a third-party payment.
There are also other circumstances where you may need to make an adjustment.
You must issue an adjustment note to the purchaser if you make a taxable sale and the price of the sale subsequently changes, unless the amount of the adjustment is $75 or less.
Additionally, you must issue a third-party adjustment note if you make a third-party payment, unless the amount of the adjustment is $75 or less.
You must issue the adjustment note no more than 28 days after one of the following, whichever is earlier:
- the purchaser asks you for the adjustment note
- you became aware of the adjustment and you had issued a tax invoice for the original sale.
As a purchaser, you must have an adjustment note before you can make an adjustment for an increase in the price of a purchase you made.
As a payer, you must have a third-party adjustment note before you make an adjustment for a third-party payment.
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Fixing an error
If you make an error in your activity statement you may be able to correct it using the policy set out in the guide Correcting GST errors.
If correcting the error is outside the circumstances and conditions set out in the guide, you will need to do one of the following, depending on when the error occurred. If it occurred in a tax period starting:
- On or after 1 July 2012 – you will need to amend your assessment for the period in which the error occurred. You can revise your activity statement, ask us to amend your assessment (using the approved form) or lodge an objection. You have four years and a day from the date you lodged your activity statement / annual GST return to make the amendment request or lodge your objection.
- Before 1 July 2012 – you may revise the activity statement for the period in which the error occurred, provided you are within the time limits for making revisions.
From time to time, you may need to change your net GST liability for a reporting period. These changes are called amendments. You may also need to fix a mistake made on an activity statement or annual return you have already lodged.