What is Tax Audit?
IRAS tax audit is an inspection of the taxpayer’s business records and financial affairs to ensure the amount of tax that reported and paid are according with tax laws & regulations. The purposes of IRAS’s tax audit programme are:
- Ensure your business' tax returns follow the tax law;
- Educate your business on your tax obligations and how to comply; and
- Identify tax laws, policies and processes where we can simplify or clarify.
Process of Tax Audit
Unlike tax investigation, tax audit is not conducted unexpectedly. Taxpayer will usually receive an advanced notification from the IRAS tax officer either via letter, email or telephone call prior to the auditor’s visit. Such visit by auditor is called a field audit.
Audits are conducted by examining your accounting books, records and financial affairs (business records and non-business records where applicable) to verify that income tax returns submitted are in compliance with tax laws. The auditors might re-visit you on another arranged date again if the requested information or records are incomplete or unavailable.
Conclusion of Audit
Most of the audits are completed within 12 months. After conclusion of audit, IRAS will communicate the outcome by writing or through meeting.
1. Communicating and discussion of the findings
Should there be any adjustment needed, IRAS will explain the basis of the adjustment. Issues are discussed with a view to reaching a mutually acceptable conclusion.
They will also advise on the areas which you could make improvement to better comply with the tax laws.
2. If errors are discovered
Should the audit conclude that errors had been committed, IRAS will issue the Notice(s) of Additional / Amended Assessment and an Offer of Composition (penalty).
If taxpayer is not satisfied with the Notices of Assessments / Offer of Composition, he/she must object in writing within 30 days stating the specific grounds of objection.