Compliance
Amendment
An amendment is a correction to a lodged tax document, such as a BAS or tax return, made by the taxpayer or the ATO to fix an error or change a position.
Mistakes happen, and the tax system allows lodged documents to be amended. An amendment can be made by a taxpayer to correct an error or omission, or by the ATO if it finds that the original position was wrong. Common examples are amending a BAS to fix incorrectly reported sales or credits, or amending an income tax return to include income or a deduction that was missed.
For GST on a BAS, the method depends on the situation. Small errors can sometimes be corrected by adjusting the figures in a later BAS, subject to conditions set by the ATO, including time limits and a cap on the size of the error. Where the conditions are not met, the taxpayer can lodge a revised BAS through the ATO online services or with the help of a registered agent. The ATO website sets out the current options.
Time limits apply. As a general guide, a business can claim GST credits within four years, and the ATO can amend GST assessments within a similar timeframe, with longer periods in cases of fraud or evasion. For income tax, the time limits for individuals and small businesses with simple affairs are usually shorter than for other taxpayers. Because limits differ by tax type and circumstance, check the ATO guidance for the time limits that apply to you.
An amendment can result in more tax, less tax or a refund. If more tax is payable, the general interest charge may apply from the original due date for GST, and shortfall interest charge may apply for income tax. If the error resulted from a failure to take reasonable care, a penalty may also apply. Making a voluntary correction before the ATO starts a review is generally the best way to limit the cost.
When the ATO amends a taxpayer's assessment, it issues a notice explaining the changes. The taxpayer has the right to object if they disagree, within the time limit stated for the type of decision. The amended assessment generally replaces the earlier one, so it is the new figure that must be paid or that gives rise to a refund.
Record keeping is essential for amendments. Documents supporting the correction should be retained, including tax invoices, bank records and workings, for the standard five years. Good records also make it easier to explain the error to the ATO if there is a query. Accounting software that keeps an audit trail helps show what was changed and when.
This page is general information only. Confirm your position with the ATO or a registered tax professional.
Worked example
A business discovers that a $2,200 supplier invoice with $200 GST was never claimed in the BAS for a quarter eight months ago. Within the time limit, it amends the BAS or includes the credit in a later BAS where conditions are met. The extra $200 credit reduces the net GST payable, and there is no interest since the correction results in a lower amount.
Practical tips
- Correct errors promptly. Time limits apply to claiming credits and to amending returns.
- Check whether the ATO allows you to fix a small GST error in your next BAS before lodging a revised one.
- Keep supporting documents for at least five years so you can justify the change.