If you are GST-registered, you are responsible for ensuring that all the information reported in your GST returns is correct.
While we believe that most businesses aim to be compliant (e.g. file accurate GST returns), there remains some who make mistakes. Some businesses make mistakes in their GST reporting because of ignorance of the tax laws, some do so because they are careless and do not exercise care, and there are also some who deliberately under-report output tax or over-claim input tax because they have fraudulent intentions. Audit is an avenue for IRAS to determine if GST-registered businesses have correctly reported GST in their tax returns, so that the necessary corrections can be made. Audits also help IRAS to safeguard tax revenue.
Through audits, we aim to:
- Educate and facilitate compliance of businesses who are unaware of or careless about the GST rules
- Deter non-compliance by creating an audit presence
- Detect errors to rectify past mistakes and to improve future compliance
- Identify GST rules which we can simplify or provide more clarity
On this page:
What can businesses expect during an audit?
An audit involves verifying that GST has been properly accounted for your business transactions, and to ensure that the information reported in your GST returns is correct. This includes checking if your supplies are classified correctly, if GST was properly charged and accounted for, if input tax was claimed correctly, and if the values of supplies, purchases and taxes reported are complete.
How are businesses selected for audit?
Audits are conducted on a broad range of industries. Within each industry, we generally adopt a risk-based approach in selecting businesses for audits. We also periodically conduct audits on businesses to check the general level of compliance. IRAS does not assume that a business selected for audit has made GST errors, and every case will be reviewed fairly.
How is an audit conducted?
An audit can be conducted via emails, letters, faxes and telephone interviews. We may also visit your premise or request to meet your key personnel or employees.
In the course of our audit, we will request for:
- Information on your business (e.g. information on business arrangements, running of business)
- Sales and purchases listings to verify the accuracy of the figures reported in your GST returns
- Supporting documents for your business transactions (e.g. invoices, export documents)
- Completed self-review checklists (e.g. self-review form for pre-registration input tax claims, bad debt relief)
We may also seek confirmation from your customers, suppliers and banks to determine if the transactions you reported in your GST returns are genuine. You may also need to demonstrate your process of recording transactions into computer system.
Sales and purchases listings
You should maintain sales and purchases listings to support the figures reported in your GST returns.
When we request for listings during an audit, we will ask for the listings to be provided in the form of an IRAS Audit File (IAF)*. If you are not using accounting software capable of generating an IAF, you should ensure that the listings are provided in Microsoft Excel file type with the following information. An image reproduction of your listings (e.g. in PDF file type) is not acceptable.
Sales listings for standard-rated supplies/ zero-rated supplies/ exempt supplies:
| Invoice Date |
Invoice Number |
Name of Customer |
Description |
Invoice amount excluding GST ($) |
GST ($)
(If applicable)
|
Destination of goods
(if applicable) |
|
|
|
|
|
|
|
Purchase listing for taxable purchases:
| Invoice Date |
Invoice Number |
Name of Supplier |
Supplier's GST Registration Number |
Description |
Invoice amount excluding GST ($) |
GST ($)
(If applicable)
|
|
|
|
|
|
|
|
You may use these template worksheets (60 KB).
Note: An IRAS Audit File (IAF)* is a data file containing standardized accounting information required by us for our audit purpose. Accounting softwares capable of producing IAF will ensure that the information transmitted from your business to us is in a format that is readable by us. Please refer to IRAS’ Accounting Software Register for a list of accounting software that can produce IAF.
What empowers the Comptroller to obtain and request for information?
The Comptroller is empowered under Section 84 of the Goods and Services Tax Act to obtain or request for information, documents, computers, computer program and software etc.
How do I verify the identity of the IRAS officer who is conducting the audit?
The IRAS officer who visits your premises to conduct an audit will carry an authority pass which allows you to verify his/her identity. Should you require confirmation on the identity of the holder, please call IRAS on 6351 2044 or 6351 2046.
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What does IRAS expect from me during an audit?
We understand that conducting an audit may have an impact on your business operations. To ensure the speedy conclusion of an audit, we seek your cooperation in :
- Providing full access to your premises, records and documents
- Ensuring copies or extracts of records and documents can be made
- Providing timely, complete and accurate replies to our requests for information
- Being truthful and honest in your communication with us
Most GST audits are completed within 12 months. We also seek the co-operation of GST-registered businesses to provide the requested information on a timely basis, to facilitate the completion of audits. Your cooperation will help to speed up the audit process.
What is the consequence for obstructing the audit?
It is an offence under Section 66 of the Goods and Services Tax Act to obstruct the Comptroller or any officer in carrying out his duties. On conviction, offenders shall be liable to a fine not exceeding $5,000 and/or imprisonment for a term not exceeding 6 months.
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What happens at the conclusion of an audit?
We will notify you of the outcome of the audit in writing.
Assessments may be raised to make adjustments to your reported values and penalties may be imposed for additional tax payable. In the letter, we will explain:
- The basis of any adjustment
- The reasons for any penalty imposed and the amount
- Issues that you need to look out for to better comply with the GST rules
How do I object to an audit assessment?
If you disagree with our assessment, you may file an objection. For more information, please refer to Objecting to audit assessment.
What can I do to improve my compliance?
Good compliance can be achieved by:
- Engaging personnel with sound GST knowledge (e.g. personnel who have attended GST Courses conducted by the Tax Academy) and adequate experience
- Practising good record-keeping
- Using computerised accounting system
- Having good internal controls
We provide the GST Assisted Self-help Kit (ASK) as a self-assessment package designed to help you effectively manage your GST compliance. For more information, please refer to GST Assisted Self-help Kit.
You are encouraged to conduct periodic reviews of your GST returns and to disclose any error voluntarily. For a start, you may go through the guide “Avoid Costly GST Errors” to avoid some of the common errors listed.
What are the penalties for submitting incorrect GST returns?
With good compliance, you can avoid making mistakes which can have costly consequences. You may be penalised for up to 200% of the tax undercharged or over claimed for the submission of incorrect GST returns and be liable to a fine and imprisonment term. Businesses that commit fraud may be more severely dealt with.
To encourage voluntary disclosures of past errors and omissions, penalties may be reduced for voluntary disclosures which meet the qualifying conditions under IRAS’ Voluntary Disclosure Programme.
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Recent audit activities and results
We will not hesitate to take enforcement actions against non-compliant businesses. Cases involving serious non-compliance may face prosecution actions.
From 1 Apr 2009 to 31 Mar 2010, a total of $154 million in tax and penalties was recovered from our audits on businesses.
You may wish to refer to Recent Prosecutions for GST for cases prosecuted in court.
For IRAS’ audit attention for years 2009 and 2010, please refer to Compliance Focus on GST.