If you’re a small business owner, getting GST right is essential—but mistakes can happen. If you’ve accidentally charged GST when you shouldn’t have, don’t panic! There are steps you can take to correct the issue.

Common GST Mistakes
You may have incorrectly charged GST if:
✅ You treated something that isn’t a sale as a taxable sale.
✅ You incorrectly applied GST to a GST-free or input-taxed sale.
✅ You miscalculated your GST liability, resulting in an overpayment on your Business Activity Statement (BAS).

What Happens Next?
The most important factor is whether you’ve passed on the excess GST to your customer.

In most cases, once you’ve charged GST and issued a tax invoice, the ATO considers it passed on to the customer. This means that under tax law, the excess GST is still considered payable, and the ATO cannot refund it to you directly.

How to Fix the Error
If you’ve charged too much GST, you have two options:

1. Reimburse Your Customer

  • If you refund the excess GST to your customer, you can reduce your GST liability by making a decreasing adjustment on your next BAS.
  • If your customer is GST-registered, they will need to make a corresponding increasing adjustment on their end.

2. Request a Refund from the ATO

  • In rare cases, the ATO may refund excess GST that hasn’t been reimbursed to the customer.
  • However, this is only allowed in specific circumstances where it wouldn’t result in a windfall gain for your business.

If You Haven’t Passed on the GST
If you can prove that you didn’t pass on the excess GST (which is rare), you can correct the mistake in two ways:

  • Adjust it on a future BAS within the allowed time frame.
  • Revise the original BAS where the mistake was made.

For most small businesses (GST turnover under $20 million), you can correct GST debit errors up to $12,500 within 18 months of the original BAS due date.

Time limits apply: You cannot correct an error to claim additional GST credits if the four-year time limit for claiming those credits has expired.

Need Help?
If you’re unsure about your GST obligations or how to fix an issue, contact our office today.

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