A GST correction needs to be done when a clerical error is made on entering a transaction. The error may be found by yourself when you are reviewing your information or your accountant may make you aware of the error and ask you to correct it.
The GST can be corrected in two ways:
- Non cash adjustment (adjustment to made without using a transaction)
- Non-cash adjustments should only be used when there is a change in the proportion of personal or private use of an item you have claimed in a previous BAS period.
- GST correction (adjustment by changing a transaction)
- This will make a correction on your next open GST period
- A GST correction should be used when you have mistakenly recorded a transaction with the incorrect GST category in a past period.
There are two types of adjustments that can be made:
- Increasing adjustments – these are made when you are increasing the amount of GST you need to remit to the ATO
- Decreasing adjustments – these are made when you are reducing the amount of GST you need to remit to the ATO
Important: We recommend you consult your accountant prior to using either of these options.
How to make a non-cash adjustment
We will use the example scenario below to show you how to make a non-cash adjustment.
Scenario: In a previous BAS return, you purchased a computer for $3300 and claimed a refund of 100% of GST amount of $300 paid (GST Standard at 10%). This means that you are claiming 100% use for business usage. Six months later, you realise the computer has only been used for 50% of business use.
The following entry should be made in the GST Non-Cash Flow Adjustments window, shown below.
To make a non-cash adjustment:
- Click Cash Book
- Click Report
- Click Tax Reports
- The Tax Reports window will display. Select Enter GST Adjustments (Non-Cash)
- Enter the details as required, using the information provided in the example above
- Click the green tick to save and you will be returned to the Tax Reports
- If you would like to check the GST non-cash adjustment, you will need to click Enter GST Adjustments (Non-Cash)
Enter a GST Correction
- Corrections will be allowed only to transaction splits that are marked as belonging to a closed period
- If the mistake occurs in the current GST period, the corrections can be made through editing the record concerned in the Transactions section (if in the current cashbook month)
- If the cashbook month is closed and GST period is opened, you can make the corrections through Find and Edit
- If the cashbook month is closed and the GST period is closed, you can make the corrections through Repair Past (from the cashbook menu)
We will use the example scenario below to show you how to enter a GST correction.
Scenario: You have recorded a GST Free item as Standard category. In previous BAS returns, you have been recording the Third Party Insurance on licenses as Standard, therefore, claiming input tax credits you are not entitled to. You have realised this, and must use a GST correction to change the GST category for the split to GST Free.
In this example, the GST correction will appear under the normal Taxable Supplies (Standard) list on the GST detailed report and the GST included total added to the figure at G1 on the BAS.
To enter a GST correction:
- From the Home page, click Cash Book
- Click Repair Past
- Click Repair Transactions
- Click Find & Edit to search for the transaction to be corrected
- In the Select Transactions To Find window, enter the transaction details that you know to search for the entry to be corrected. Click the green tick
- In the Repair Past Transactions window, select the transaction you wish to change by highlighting it. Clicking the Edit button
- In the Edit Cashbook Transaction window, select the split you wish to change the GST Category on
- In the Amount $ on the far right of the screen, highlight the amount of the split
- Click the (=)Select category to edit the split’s GST
Click on the dropdown arrow to select the required GST category
- Click the green tick to save
- A message similar to this one will appear
- Click Yes to transfer the adjustment required to the current BAS
- Click No to save the transaction, record changes but will not include adjustment on the current BAS. This would be chosen if you had already made the adjustment manually on previous BAS but did not correct the transaction itself.
View GST corrections
- If you want to view corrections, you need to do this from the Tax Reports menu
- Click View & Print GST corrections to see any changes you have made
- Click Record Number to display details and audit trail of the original and altered record
- Click the word NO to change to YES if the adjustment is to be recorded on the current BAS
- The adjustment is included in the correct G number in the current BAS with a note beside to clarify the amount from a past period
- You can view the history of your changes by clicking on the item in the list either in the white or yellow section
- You will now see the GST Audit Trail for the record you clicked on
Note: If you have any problems or questions relating to GST corrections, you may wish to consult your accountant.