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WHAT ARE THE DIFFERENT TYPES OF GST ERRORS AND HOW TO RECTIFY THEM?

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24
May

Occasionally, an individual may find out he/she has made some errors on their previous activity statement. For instance, he/she may find extra receipts or purchase invoices or completely forgotten about sales invoices for the previous period. These sorts of errors lead to GST errors.

GST errors may be credit errors. These errors are also known as decreasing adjustments. These may arise if an individual reports GST on a specific amount of sales twice or he/she forgets to put a purchase invoice in the activity statement.

GST errors may be debit errors too. These errors are also known as increasing adjustments. These may arise if an individual forgets to put a sales invoice or coded a specific sales amount as GST free which in fact included GST.

These errors can be rectified on a later activity statement if these errors meet the time and amount limit stated in the following table-

 

Annual Turnover  Time Limit 

Correction Amount

Limit
Less than $20m

Up to 18 months

(18 monthly activity statements, 6 quarterly activity statements or one annual GST return).
Less than $5,000
$20m to less than $100m Up to three months (three monthly activity statements) Less than $10,000
$100m to less than $500m Up to three months (three monthly activity statements) Less than $25,000
$500m to less than $1b Up to three months (three monthly activity statements) Less than $50,000
$1b and over Up to three months (three monthly activity statements) Less than $300,000

To fix these errors in the activity statement you need to complete the appropriate boxes on the GST section. For accounts method, at boxes 1A and/or 1B a simple addition or subtraction is needed to adjust the amounts for the current period. These corrections may also be reflected in the amounts of sales and purchases (GST-inclusive or GST-exclusive) at boxes G1, G2, G3, G10 or G11 as appropriate. For calculation sheet method, you need to add or subtract the GST inclusive amount of the correction at the appropriate box on the calculation worksheet. If these errors relate to GST adjustment, then the corrected adjustment should be multiplied by 11. For increasing adjustments, the amount should be included in G7 (adjustments), whereas for decreasing adjustments, the amount should be included in G8 (adjustments).
However, you cannot correct a credit or debit error on a later activity statement if any of the following apply:

  • If the error is related to compliance activity; 
  • If there was correction of the GST error in another reporting period; 
  • The debit error occurred because of recklessness or intentional disregard of a GST law.

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