There are new more generous conditions that allow businesses to correct GST errors in the current BAS, instead of having to amend the past BAS which included the error. The conditions involve the type of mistakes that qualify (under or over-estimation) and the age and $ amount involved.
Common mistakes the ATO sees include:
- Incorrect application if the margin scheme rules for sale of land;
- Incorrect application of the going-concern rules on sale of a business;
- Claiming GST credits when supplier not registered;
- Claiming GST credits on Stamp Duty;
- Accounting for GST on cash basis when not eligible (turnover less than $2 mill).
We have written about other common GST mistakes – see our articles.
Usually when an error is discovered on a past BAS that has been lodged, you need to request and lodge a revised BAS form or electronic lodgement amendment. In some circumstances, you can avoid the hassle and time by allow for the correction in a current BAS.
There are 2 categories – debit mistakes and credit mistakes
- Debit Mistakes – understating liability – clerical errors (eg double counting) or not including sales with GST, recording taxable sales as GST-Free
- Credit Mistakes – overstating liability – clerical errors or recording taxable acquisitions as GST-Free
New Time and Amount limits
- Debit mistakes – must not be reckless or intentional, and with turnover less than $20 mill, correct within 18 months of due date of the BAS for the tax period in which the error was made, and the overclaim is less than $10,000 (was $5,000)
- Credit mistakes – can be corrected for BAS due less than 4 years ago (previously 18 months) and there is NO $ limit.
For more details, see the ATO site and the lower part of the page Correcting GST mistakes
Refer to Correcting GST mistakes before 10 May 2013 to access the historical guidelines that you would have followed if you corrected an activity statement before 10 May 2013.
Refer to Appendix C in Correcting GST mistakes before 10 May 2013 for a summary of the key differences between the rules for correcting a GST error set out in this guide and the previous rules for correcting a mistake.
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