Worrying, fretting and ignoring won’t undo that heart thudding moment when you find a mistake in your GST Return. So how do you go about fixing those nasty errors? Start by getting rid of any delusional ideas, you might have, about fixing up the botched return by resending it to the IRD. Next, work out the magnitude of your error and then follow one of these steps for putting things right:
(1) Under $500* – NEXT GST RETURN
If you’ve made a simple mistake or a minor error and it’s under $500 then the discrepancy can be adjusted in your next GST return. This includes arithmetical or transposition errors.
(2) Over $500 and within four months – NOTICE OF PROPOSED ADJUSTMENT
If your total discrepancy is more than $500 and you’ve discovered it within four months of receiving the IRD assessment then you can file a Notice of proposed adjustment (IR770). You’ll find this form on the tax departments website but it really is something that should be left to a chartered accountant because you’ll need to identify the relevant tax laws.
(3) Over $500 – REQUEST AMENDMENT
For genuine errors of more than $500 you can ask the IRD to amend your GST return. You’ll need to write to the IRD with the following details:
- the tax types and periods containing the errors
- the amount of tax in error
- a description of the errors including the background circumstances and the reasons for their occurrence
- the nature of the errors, including any relevant tax laws
- how and why the errors were identified
- where relevant details of any incorrect advice given directly to the taxpayers by Inland Revenue and how the taxpayers relied on that advice
- the action required to ensure correctness
- all other relevant documents and records supporting the amendment requests.
Xero cleverly enters any changes you make into the adjustment box of your next GST Return but please don’t blindly accept this without checking that the adjustment is indeed a simple mistake or a minor error under $500*
Regularly making errors in your GST returns isn’t smart. The IRD can charge heavy hitting penalties for not taking reasonable care, unacceptable interpretation, gross carelessness and unacceptable tax position so if you’re a serial-error-maker we strongly recommend you keep yourself safe by getting a good accountant to prepare your returns for you.