Senate

Explanatory Memorandum

(Circulated by authority of the Treasurer, the Hon Peter Costello, MP)

Chapter 4 - Correcting GST errors

Outline of chapter

4.1 Part 4 of Schedule 1 to this Bill describes amendments to the GST Act to permit the Commissioner to make determinations that provide for a simplified mechanism for correcting errors in GST returns.

Detailed explanation of new law

4.2 Section 17-20 provides that the Commissioner may make a determination that allows a net amount for a tax period to take account of the need to correct errors made in the immediately preceding tax period. [Schedule 1, Part 4, item 67]

4.3 The intention of this section is to allow the Commissioner to make flexible rules to minimise the effort required to remedy small errors made in preparing GST returns.

Example 4.1

The Commissioner makes a determination in relation to the correction of errors made in GST returns. Benjamin prepares and lodges his GST return for the third quarter of 2001. Some days later Benjamin realises that in preparing that GST return he had mistakenly double counted a $100 input tax credit in relation to a stationery supply. Benjamin checks that this correction falls under the limitations provided in the Commissioners determination and finds that it does. As such, he may correct the error by subtracting the overclaimed input tax credit from his GST return for the fourth quarter of 2001.

Application and transitional provisions

4.4 These amendments apply from 1 July 2000. [Schedule 1, Part 4, item 68]