What happens if I make a mistake on my tax return?

In Plain English

If you find an error in your fuel tax or GST return, don't panic! You might be able to fix it in a later return, instead of having to amend the original one. However, there are rules:

  • The error must relate to fuel tax credits, GST, input tax credits, or adjustments.
  • The original tax period with the mistake must have started on or after 1 July 2012.
  • You need to lodge the later return (where you're fixing the mistake) within a specific timeframe, generally four years from when the original return was assessed.
  • The error can't be part of an active audit or review by the ATO, unless they give you permission to correct it.
  • You can only correct the error once using this method. If you only fix part of the error, you'll need to amend the original return for the rest.

For GST errors, there are extra things to consider if the mistake caused you to underpay (a debit error):

  • The error wasn't due to recklessness or intentionally ignoring the law.
  • You fix it within a certain time (12 or 18 months depending on your turnover).
  • The total of all your underpaid errors, minus any overpaid errors you're also correcting, is below a certain limit.

You can always choose to amend the original return instead of using this method.

Detailed Explanation

The Fuel Tax (Correcting Fuel Tax Errors) Determination 2023 and the A New Tax System (Goods and Services Tax) (Correcting GST Errors) Determination 2023 provide a mechanism for correcting errors made in earlier tax periods in a later tax period, under certain conditions.

Fuel Tax Credits:

  • A person's entitlement to a fuel tax credit ceases if it is not included in an assessment of their net fuel amount within 4 years after the day on which they were required to give the Commissioner a fuel tax return for the relevant period (Chunk 2).
  • An error in calculating the amount of a fuel tax credit is considered a credit error, resulting in an incorrect assessed net fuel amount (Chunk 2).
  • Such errors can be corrected in a subsequent fuel tax return (Chunk 2).
  • However, if the fuel tax credit was not claimed at all, it is considered a deferred attribution and can be claimed in a later period, subject to time limits in Division 47 of the Fuel Tax Act (Chunk 2).
  • Adjustments arising under Division 44 of the Fuel Tax Act are attributed to the tax period in which you become aware of it, as per section 65-10 of the Fuel Tax Act (Chunk 2).

GST Errors:

  • An error is defined as a mistake that results in an overstated (credit error) or understated (debit error) assessed net amount for a tax period (Chunk 1).
  • The A New Tax System (Goods and Services Tax) Act 1999 and section 105-65 in Schedule 1 to the Taxation Administration Act 1953 exclude certain errors related to input tax credits extinguished under Division 93 of the GST Act and amounts the Commissioner need not refund under section 105-65 in Schedule 1 to the TAA (Chunk 1).

Conditions for Correcting Errors in a Later Tax Period:

Section 6 of both the Fuel Tax (Correcting Fuel Tax Errors) Determination 2023 and the A New Tax System (Goods and Services Tax) (Correcting GST Errors) Determination 2023 specifies the conditions that must be met to correct an error in a later tax period:

  1. The error must relate to an amount of fuel tax credit/GST, input tax credit, or any adjustments under the relevant Act (Chunk 3, Chunk 1).
  2. The earlier tax period must have started on or after 1 July 2012 (Chunk 3, Chunk 1).
  3. The fuel tax/GST return for the later tax period must be lodged within the period of review for the assessment of the net fuel/GST amount of the earlier tax period (Chunk 3, Chunk 1). The period of review is generally 4 years from the day after the notice of assessment is given, as per subsection 155-32(2) in Schedule 1 to the Taxation Administration Act 1953 (Chunk 3).
  4. The error must not relate to a matter that is subject to a compliance activity at the time of lodging the fuel tax/GST return, unless the Commissioner has provided written notification that the error can be corrected (Chunk 3, Chunk 1).
  5. The error must not have been previously corrected in another tax period (Chunk 3).
  6. For debit errors (under GST), additional conditions in section 7 of the A New Tax System (Goods and Services Tax) (Correcting GST Errors) Determination 2023 must be met (Chunk 3, Chunk 3).
  7. The entity must be registered for GST (Chunk 3).

Debit Error Conditions (GST):

Debit errors can only be corrected if (Chunk 3):

  • The debit error was not the result of recklessness or intentional disregard of the GST law (as defined in Subdivision 284-B in Schedule 1 to the Taxation Administration Act 1953).
  • It will be corrected in a GST return lodged within the debit error time limit (18 months for current GST turnover less than $20 million, 12 months otherwise).
  • The net sum of the debit errors (debit errors less credit errors) does not exceed the debit error value limit (dependent on current GST turnover).

Choosing How to Correct an Error:

  • Taxpayers are not obligated to correct errors in a later tax period and can instead request an amendment to the assessment for the earlier tax period (Chunk 4).
  • The instrument cannot be applied more than once to correct the same error (Chunk 4).
  • If an error is only partially corrected, an amendment to the original assessment is required to claim the remaining amount, subject to the 4-year time limit in section 47-5 of the Fuel Tax Act and the period of review for the assessment (Chunk 4).