Correcting GST errors¶

Sometimes the goods and services tax (GST) on a lodged Business Activity Statement (BAS) turns out to be wrong. Maybe a sale was missed, or a credit was claimed twice. The Australian Taxation Office (ATO) has a clear, plain way to sort out what kind of GST mistake you have made and how to fix it.

The ATO puts every GST mistake into one of two boxes: a credit error or a debit error. Which box you are in decides what you can do next.

Why this matters¶

Getting the GST right keeps you square with the ATO. If you overpaid, fixing the error gets your money back. If you underpaid, fixing it promptly keeps things simple and can reduce any interest that would otherwise build up.

What you will learn¶

• The difference between a credit error and a debit error
• That many GST errors can be fixed on a later Activity Statement
• When to revise the original statement instead

Understanding the concept¶

The ATO describes two types of GST error.

A credit error is when a mistake means you reported too much GST — or claimed too little GST credit — so you ended up overpaying for that period. In other words, the error was in the ATO's favour. A missed GST credit or a sale double-counted are common examples.

A debit error is the opposite. It is when a mistake means you reported too little GST — or claimed too much GST credit — so you underpaid for that period. Here the error was in your favour, and you still owe the difference.

Once you know which type you have, you have the same two paths as any BAS mistake:

• Fix it on a later Activity Statement. For many GST errors, the ATO lets you simply correct them on a later BAS, without touching the old one. This is only allowed within limits the ATO sets — the limits depend on the type of error, how recent it is, and (for debit errors) your GST turnover. A separate lesson covers those limits.
• Revise the original statement. If the error does not fit those limits, you go back and lodge a corrected version of the original statement for the period the error happened in.

Example¶

Priya's cafe claimed a GST credit twice on the same equipment purchase last quarter. That means she reported too little GST overall and underpaid — a debit error. The amount is small and the quarter is recent, so she is within the ATO's limits and picks the correction up on her next BAS.

Jordan's hardware business is different. Going back over a year, he finds he forgot to claim a batch of GST credits, so he overpaid — a credit error. Because the period is well outside the limits for the easy path, Jordan revises the original statement for that quarter to claim the credits back and get the right figures on record.

Common mistakes¶

• Mixing up the two types — remember, a credit error means you overpaid; a debit error means you underpaid.
• Assuming every GST error can go on the next BAS — the easy path only works within the ATO's limits.
• Leaving a debit error unfixed — you still owe the difference, and delay can add interest.

How this works in myaccountant¶

Key points¶

• The ATO splits GST mistakes into credit errors and debit errors.
• A credit error means you overpaid — too much GST reported or too little credit claimed.
• A debit error means you underpaid — too little GST reported or too much credit claimed.
• Many GST errors can be fixed on a later Activity Statement within the ATO's limits.
• If an error falls outside those limits, revise the original statement.
• A debit error still owes the difference, so fix it promptly.

Learn next¶

• When to revise a BAS
• Correcting PAYG withholding
• Materiality thresholds

General information only — not tax, super or financial advice.