• 21 January, 2026

How to Fix Incorrectly Charged GST in Australia (2026 Guide)

Charging GST incorrectly is a common mistake for Australian businesses—but fixing it the wrong way can cost you money.

If you’ve overcharged GST, reported it incorrectly in your BAS, or aren’t sure how to correct it, this guide explains exactly what to do, what the ATO expects, and how to stay compliant.

What Does “Incorrectly Charged GST” Mean?

You’ve charged excess GST when you treat a transaction as taxable when it shouldn’t be.

This usually happens when you:

• Treat a non-sale as a taxable sale
• Charge GST on GST-free or input-taxed items
• Miscalculate GST in your BAS
• Report more GST than required

These errors can lead to overpayment to the ATO—but getting that money back isn’t always simple.

Can You Get a Refund from the ATO?

Here’s the critical rule:

👉 If you charged GST to your customer and did NOT refund it, the ATO treats it as correctly payable GST.

This means:

• ❌ You cannot claim a refund from the ATO
• ✅ Even if it was charged by mistake

That’s why correcting GST errors properly is essential.

What Does “GST Passed On” Mean?

The ATO assumes GST has been passed on to the customer if:

• The sale was treated as taxable
• A tax invoice was issued showing GST
• The price included GST (even if not shown separately)

Exception:

If you can prove GST was not passed on, you may:

✔ Treat it as a GST error
✔ Correct it in a future BAS

How to Fix Incorrect GST in Your BAS

There are two main ways to correct GST mistakes:

1. Correcting a GST Error

You can fix errors in a later BAS if:

• GST was not passed on
• You have clear supporting evidence

2. Making a GST Adjustment (Most Common)

If you did pass on GST, you must:

• Reimburse your customer
• Report a decreasing adjustment in your BAS

This allows you to recover the excess GST paid to the ATO.

Reimbursing Customers: What You Need to Know

If you refund excess GST:

• You can claim a decreasing adjustment
• This must be reported in the BAS for the period you reimbursed the customer

Important:

If you don’t reimburse the customer:

❌ You generally cannot recover the excess GST
✔ You may apply to the ATO for special consideration (not guaranteed)

What Happens for GST-Registered Customers?

If your customer is registered for GST and claimed input tax credits:

• They must make an increasing adjustment
• This equals the refunded GST amount
• It must be reported in their BAS

Can You Charge an Admin Fee?

Yes—but there are conditions.

You can charge a reasonable administration fee if:

• It reflects actual processing costs
• The customer agrees to it

Refund Rules:

• ✔ Full GST refund → if fee is reasonable and agreed
• ❌ Partial refund → if fee is unreasonable or disputed

Common GST Mistakes to Avoid

Avoid these frequent errors:

• Charging GST on GST-free items
• Incorrect invoice classifications
• BAS miscalculations
• Poor record-keeping
• Not reimbursing customers

Best Practices to Stay GST-Compliant

✔ Review GST classifications regularly
✔ Use reliable accounting software
✔ Keep accurate tax invoices
✔ Reconcile BAS before lodging
✔ Get professional advice when unsure

How Workpaper Can Help

At Workpaper Accounting Services, we help businesses:

• Correct GST errors properly
• Lodge and amend BAS accurately
• Stay compliant with ATO regulations
• Avoid penalties and cash flow issues

Get Expert GST Advice Today

Don’t let GST mistakes cost your business.

Workpaper Accounting Services
🌐 Website: https://workpaper.com.au/

📞 Phone: 0485 825 915
📧 Email: info@workpaper.com.au

📍 Address: 7 Bridge St, Werribee, Victoria 3030, Australia