GST-Registered Businesses Audits by IRAS

Audits involve reviewing the accuracy of the information in your business’ GST return. The audits are conducted on a risk-based approach. Being selected for an audit does not necessarily mean that you have made a mistake.

Purposes of Audit

These are the purposes of IRAS' tax audit programme:

  1. Ensure your business' tax returns are in compliance with the tax laws;
  2. Educate your business on your tax obligations and assist you to comply; and
  3. Identify tax laws, policies and processes where we can simplify or clarify.

What to Expect During an Audit

An audit involves verifying that GST has been properly accounted for in your business transactions, and to ensure that the information is correctly reported in your GST returns.

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.

Audit Selection

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.

Audit Methods and Requirements

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 and/or employees.
For field visits, the tax officer who visits your premises will carry an authority pass issued by IRAS. If you need confirmation on the identity of the officer, please call IRAS on 6351 2044 or 6351 2046.
In the course of our audit, we will require:

  1. Information on your business (e.g. information on business arrangements, running of business);
  2. Sales and purchases listings to verify the accuracy of the figures reported in your GST returns;
  3. Supporting documents for your business transactions (e.g. invoices, export documents); and
  4. 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/or 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.

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.

 

Sales and Purchases Listings

You should maintain sales and purchases listings to support the figures reported in your GST returns.

During an audit, the listings are to be provided in the form of an IRAS Audit File (IAF).

An IRAS Audit File (IAF) is a data file containing standardised accounting information required for audit purposes. Accounting software capable of producing IAF ensure that the information transmitted 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.

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 DateInvoice NumberName of CustomerDescriptionInvoice amount excluding GST ($)GST ($)

(If applicable)

Destination of goods

 

(if applicable)

Purchase listing for taxable purchases:

Invoice DateInvoice NumberName of SupplierSupplier's GST Registration NumberDescriptionInvoice amount excluding GST ($)

GST ($)

(If applicable)

You may use these template worksheets (60 KB).

Responsibilities of Taxpayers

During the audit, we will require your co-operation in the following ways:

  1. Provide us with full access to your premises, records and documents;
  2. Make available a room or working space for the auditors to conduct the examination of books and records;
  3. Allow us to interview operational staff or process owners
  4. Allow us to make copies/ obtain extracts of records and documents;
  5. Provide timely, complete and accurate replies to our requests for information; and
  6. Be truthful and honest in your dealings with us - full disclosure of irregularities and omissions should be made at the earliest possible time.

 

Under Section 66 of the Goods and Services Tax Act, it is an offence to obstruct or hinder the Comptroller or any officer in the discharge of his duties. Any person guilty of this offence is liable to a fine of up to $5,000 and/or imprisonment for a term not of up to six months (in default of payment).

 

Conclusion of Audits

Most GST audits are completed within 12 months. The progress of an audit depends not only on the complexity of your business' affairs, but also on the support and cooperation of your business and tax representatives.

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:

  1. The basis of any adjustment;
  2. The reasons for any penalty imposed and the amount; and
  3. Issues that you need to look out for to better comply with the GST rules.

If you disagree with our assessment, you may file an objection. For more information, please refer to Objecting to an audit assessment  .

Improving Compliance with Tax Laws

To improve compliance with tax laws, GST-registered businesses are encouraged to:

  1. Engage personnel with sound GST knowledge (e.g. personnel who have attended GST Courses conducted by the Tax Academy ) and adequate experience;
  • Practise good record-keeping ;
  • Use computerised accounting system. You may refer to the Accounting Software Register for a list of accounting software where the software developers have been reviewed to ensure that the accounting software is compliant with IRAS' technical requirements;
  • Have good internal controls; and
  • Conduct periodic reviews of your returns and disclose any error voluntarily. For a start, you may go through the  Avoiding Costly GST Errors  Guide. Penalty can be reduced for a mistake reported voluntarily which meets the qualifying conditions under IRAS' Voluntary Disclosure Programme.

Please refer to our GST Assisted Self-help Kit (ASK) , a self-assessment package designed to help you effectively manage your GST compliance, for more information.

Penalties for Submitting Incorrect GST Return

Businesses 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 dealt with more severely.

To encourage voluntary disclosures of past errors and omissions, IRAS may reduce penalties for voluntary disclosures which meet the qualifying conditions under IRAS' Voluntary Disclosure Programme .

Past Audit Activities and Results

IRAS will not hesitate to take enforcement actions against non-compliant businesses. Cases involving serious non-compliance may face prosecution actions.

For IRAS' past and ongoing audit attention, please refer to Compliance Focus on GST

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