Draft Legislative Instrument LI 2023/D13 - A New Tax System (Goods and Services Tax) (Correcting GST Errors) Determination 2023 (“the draft legislative instrument”) outlines the Australian Taxation Office’s (ATO) view about when GST errors can be corrected.  

Broadly the draft legislative instrument states that GST errors made after 1 July 2012 can be corrected if:

• The error was not made recklessly or with intentional disregard of the GST law, 
• The error is corrected within 12-18 months of being made (the timing depends on the entity’s GST turnover) and
• The error is less than the debt error limit – which also varies according to the entity’s GST turnover.

CA ANZ submission regarding this draft legislative instrument makes the following points:

• CA ANZ welcomes the ability for an entity to use the draft legislative instrument to correct errors whilst being subject to compliance activity when notified by the Commissioner in writing that the error can be corrected under the draft legislative instrument.
• CA ANZ calls for all entities to have 2 years in which to process errors on the basis that GST and BAS errors are most likely to be detected through processes of governance and diligence reviews, which typically have a longer cycle or lower frequency than annually in the average business.  It is argued that 2 years strikes the right balance between safeguarding the tax system and facilitating businesses to willingly and proactively comply with their tax obligations in the most effective manner.
• CA ANZ argues that the proposed debit error value limits for taxpayers with a GST turnover:
  • between $250 million and less than $500 million should be doubled from $50,000 to $100,000
  • between $500 million and less than $1 billion should be doubled from $100,000 to $200,000
  • $1 billion or more should be increased from $560,000 to $1m