Correcting WET errors

You can use this information to change wine equalisation tax (WET) claims you made in an earlier business activity statement (BAS) period. This is if the activity statement you use to make the change started on or after 1 July 2012. These changes took effect from 29 July 2015.

You cannot use this information if the activity statement you use to make the change started before 1 July 2012. Instead, you must revise the earlier activity statement (assuming you are within time to do so).

There are time limits for claiming WET. Generally you must claim within four years. The four years commences from the day after you were required to lodge the activity statement for the tax period in which you acquired the wine. You may be able to extend the time to amend your claim.

WET errors

A wine equalisation tax (WET) error occurs when you make a mistake in working out the WET or WET credits net amount on an earlier activity statement.

If you realise you have made an error on an earlier activity statement once it has been lodged, you must correct it. You need to work out the amount that has been over claimed or under claimed.

The WET error is the actual error amount. It is not the gross or WET inclusive price of the transaction.

A credit error means you reported and paid too much WET – for example you:

• reported a sale twice
• overstated the WET on sales.

A debit error means you reported and paid too little WET – for example you:

• failed to include WET on a taxable sale
• understated the WET on sales.

If you made multiple errors in a reporting period, you must treat each error individually when determining if it can be corrected and how to correct it.

You cannot correct a WET error more than once.

See also:

• WETE 2015/1 Wine Equalisation Tax: Correcting WET Errors Determination 2015
• When an error cannot be corrected on your current BAS

Credit errors

You can correct a credit error on your current activity statement if all of the following conditions apply for each credit error:

• the error is within the credit error time limits
• you are not subject to a compliance activity
• you have not corrected the WET error in another reporting period.

Credit errors are not subject to value limits.

Credit error time limits

Activity statement error occurring on or after 1 July 2012

If you made a credit error in a reporting period that started on or after 1 July 2012, you can correct the error in any later activity statement that is within the four year period of review (that is, four years from the day after you lodged the activity statement in which the error occurred).

You may be able to extend the time to amend the error.

Error occurring before 1 July 2012

If you made a credit error in a reporting period that started before 1 July 2012, you can only correct the error in the original activity statement on which the error occurred. You must make any correction within the times above unless the time has been extended.

See also:

• Extending the time to make corrections

Debit errors

You can correct a debit error on your current activity statement if all of the following conditions apply for each debit error:

• the error is within the debit error time limits
• the error or net sum of the debit errors is within the debit error value limits
• you are not subject to a compliance activity
• you have not corrected the WET error in another reporting period
• the debit error was not as a result of recklessness or intentional disregard of a WET law.

If you do not meet the above conditions, you must correct some or all of the error on the original activity statement on which the error occurred – penalties and interest charges may apply. You can do this online via Online services for business or phone us to get a revision form.

See also:

• Online services for business
• Phone us

Debit error time limits

Time limits apply for the correction of a debit error from the time the debit error occurred (not when it was discovered).

You can correct a debit error on your current activity statement if it is within the debit error time limit that corresponds with your current GST turnover in the table below. Otherwise you must correct the error on the original activity statement.

Table 1: Debit error time limit

Current GST turnover	Debit error time limit
Less than $20 million	The debit error must be corrected on an activity statement that is lodged within 18 months of the due date of the activity statement in which the error was made.
$20 million or more	The debit error must be corrected on an activity statement that is lodged within 12 months of the due date of the activity statement in which the error was made.

See also:

• GSTR 2001/7 Goods and services tax: meaning of GST turnover, including the effect of section 188-25 on projected GST turnover

Debit error value limits

You can correct a debit error on your current activity statement if the total of the debit errors, less the sum of any credit errors included as corrections in the return, is within the debit error value limit that corresponds with your current GST turnover in the following table.

If the above does not apply, the excess must be corrected in the earlier (original) activity statement.

Table 2: Debit error value limit

Current GST turnover	Debit error value limit
Less than $20 million	Less than $16,000
$20 million to less than $100 million	Less than $32,000
$100 million to less than $500 million	Less than $64,000
$500 million to less than $1 billion	Less than $128,000
$1 billion or more	Less than $718,000

When an error cannot be corrected on your current activity statement

You cannot correct a credit or debit error on your current activity statement if any of the following occurs:

• the WET error relates to a matter that was specified to be subject to a compliance activity or if the WET error was made in a reporting period that is subject to a compliance activity
• you have corrected the WET error in another reporting period.

You cannot correct a debit error on your current activity statement if the debit error was as a result of recklessness or intentional disregard of a WET law.

If you are subject to compliance activity

A compliance activity is an examination of your tax affairs undertaken by us and includes reviews, audits, verification checks, record-keeping reviews or audits and similar activities.

If you receive advice by phone or in writing about our intention to conduct a compliance activity, you cannot correct an error in your current activity statement:

• that is the subject matter of a compliance activity
• arising in a reporting period that is subject to the compliance activity.

If you find errors, it is in your best interest to voluntarily disclose them. If you tell us about your error, it will be taken into account when we consider penalties.

A compliance activity is completed when you receive a notice of assessment or notice of amended assessment, or when we tell you that the examination has been finalised.

 

If you have corrected the WET error in another reporting period

You cannot correct a WET error more than once. For example, if you revise the earlier activity statement in which the WET error was made, or if you have already corrected the WET error in another reporting period, you cannot then correct the error on your current activity statement.

This includes if you partially correct a debit error because the relevant debit error value limit was exceeded. You cannot correct the amount that exceeded the debit error value limit on a subsequent activity statement.

See also:

• Debit error value limit

Recklessness or intentional disregard of a WET law

You cannot correct a debit error if the error is a result of recklessness or intentional disregard of a WET law.

Recklessness is behaviour that falls significantly short of the standard of care expected of a reasonable person in the same circumstances. It is gross carelessness.

Intentional disregard of the law is something more than reckless disregard of, or indifference to, a tax law. The intention is a critical element. That is, a person must have understood the effect of the law and how it operates and made a deliberate choice to ignore the law.

See also:

• MT 2008/1 Penalty relating to statements: meaning of reasonable care, recklessness and intentional disregard

Extending the time to make corrections

You can extend the time you have to make corrections if both the following apply:

• the claim is for a reporting period that commenced before 1 July 2012
• you notify us that you want an extension within the four years from the end of the reporting period in which you made an error.

To notify us that you want an extension, provide the following information:

• your business name
• your Australian business number (ABN)
• the reporting periods you want an extension for
• a description of the error made.

You can notify us:

• online using the secure mailbox in our Online services for business
• by fax to 1300 650 128
• write to us at

Australian Taxation Office
PO Box 3001
PENRITH NSW 2740

We may not accept your notification if you do not provide a description or reason why you are entitled to the credit or refund.

See also:

• MT 2009/1 Miscellaneous taxes: notification requirements for an entity under section 105-55 of Schedule 1 to the Taxation Administration Act 1953

Records you need to keep

You need to keep records detailing the nature and extent of any change for five years if you:

• correct a WET error
• claim an amount you failed to claim on an earlier activity statement.

Records need to include date, the error amount, and the reporting period when the error was made and the activity statement it was corrected on. You must also keep records and other relevant information to explain the correction.

Penalties and interest charges

You will not incur penalties or general interest charge (GIC) if you:

• correct WET errors in your current activity statement, when you become aware of it
• correct errors to your WET claims in your current activity statement in line with the conditions above.

You can claim the GIC as an income tax deduction.

How to correct wine equalisation tax (WET) errors you made on an earlier business activity statement (BAS).