If a taxpayer finds a mistake made on a previous activity statement, they can:-
- Correct the error on a later activity statement if the mistake fits the definition of a “GST error” and certain conditions are met;
- Lodge an amendment – the time limit for amending GST credits is four years, starting from the day after the taxpayer was required to lodge the activity statement for the relevant period; or
- Contact the Australian Taxation Office (ATO) for advice
The benefit of correcting a GST error on a later activity statement (where the conditions are met) is that the taxpayer will not be liable for any penalties or general interest charge (GIC) for that error. The ATO says it is generally easier to correct a GST error on a later activity statement than to revise an earlier activity statement. Revising an earlier activity statement that contains an error can incur penalties or GIC.
Accountants often prefer to amend the activity statement, to match the returns better with the accounting records, particularly if that results in an extra refund.