Correcting GST errors and making adjustments on your business activity statements

If you identify any error in identifying a goods and in a service tax for a previous period or on an already lodged business activity statement (BAS), there is always scope to make a correction.

The ATO has understood the necessities of these adjustments for businesses, which can easily come about because of change of circumstances or facts. These can include:

• Modifying  the price of taxable sale or purchase
• Cancellation of taxable sale or purchase
• GST-free export supplies that are not exported within the required time (and therefore become taxable)
• Changes in creditable purpose  and bad debits

If your business overstated its GST liability, then ATO imposes a four year time limit for making changes, which is considered down from when the error was made. For the mistakes on which not enough GST has been accounted for, then in that condition there is an added factor relating to business’s turnover. If the annual turnover for the business is less than $20 million, then in that scenario adjustment must be made within 18 months. If the annual turnover is more than $20 million then it must be paid within 12 months In General, it can be much easier to correct a GST error on a later activity statement rather than revising the earlier statement. But being able to make an adjustment can be important to avoid liability to any penalties or general interest charge.As adjustments relate to changed facts or circumstances, which will have an impact on the subsequent GST outcome of a transaction, the resulting change in need of an adjustment will generally have resulted in a business having either claimed too much GST, or not claimed enough.

Claiming too much GST

 How does business claim too much GST on a BAS? Whoever provides the information in order to include the BAS could have:

• Missed to include a sales invoice
• Coded a sale as GST free however it includes GST
• Error has been made in coding transactions
• A payment has been included in a purchase that is not claimable as a GST credit

Not calming enough GST

 There are some scenarios in which this might be the case include where a business:

• The error was made in coding the transactions
• Whoever filled out the BAS coded a GST sale as taxable but it was actually GST free

At Absolute Accounting Solutions we can elimimate all your errors in limited time and budget. So contact us at 1300 488 330 or visit www.absoluteaccountingsolutions.com.au