What is a tax audit
A tax audit is an examination of a taxpayer's business records and financial and financial affairs to ascertain that the amount of tax due should be reported and paid are in accordance with tax laws and regulations.
Types of tax audit
There are two types of tax audit, namely desk audit and field audit.
The objectives of for tax audit
a) To encourage voluntary compliance with the tax laws
b) To educate and create awareness of taxpayers rights and responsibilities.
Years of Assessment covered
Generally, a period of one to three years. However, it may be extended beyond the period depending on the issues identified during an audit.
Selection of cases
a) Selection based on risk analysis;
b) Information received from third party;
c) Selection based on specific industries, e.g.construction industry;
d) Selection based on specific issues for a certain group of taxpayers;
e) selection based on location;
f) Late submission of tax return;and
g) fluctuation in profit and loss, e.g. gross profit
Penalty and Offence
a) Understatement or omission of income
- 100% for failure to submit returns-S112(3)
- 300% for incorrect returns-S113(2)
b) DGIR inexercising his discretionary powers
- 45% to be imposed for the first offence
A tax audit is an examination of a taxpayer's business records and financial and financial affairs to ascertain that the amount of tax due should be reported and paid are in accordance with tax laws and regulations.
Types of tax audit
There are two types of tax audit, namely desk audit and field audit.
The objectives of for tax audit
a) To encourage voluntary compliance with the tax laws
b) To educate and create awareness of taxpayers rights and responsibilities.
Years of Assessment covered
Generally, a period of one to three years. However, it may be extended beyond the period depending on the issues identified during an audit.
Selection of cases
a) Selection based on risk analysis;
b) Information received from third party;
c) Selection based on specific industries, e.g.construction industry;
d) Selection based on specific issues for a certain group of taxpayers;
e) selection based on location;
f) Late submission of tax return;and
g) fluctuation in profit and loss, e.g. gross profit
Penalty and Offence
a) Understatement or omission of income
- 100% for failure to submit returns-S112(3)
- 300% for incorrect returns-S113(2)
b) DGIR inexercising his discretionary powers
- 45% to be imposed for the first offence
