GST Audit by IRAS in Singapore
GST Audit or Goods and Services Tax Audit by the Inland Revenue Authority of Singapore (IRAS) is a check or review by IRAS to make sure that companies and business owners comply with Singapore Goods and Services Tax Regulations.
It is important to note that GST Audit can be specific or random. For specific audit, there may be some internal inconsistency like revenue reported in your income tax return is not consistent with revenue or taxable supplies in your GST return. For random audit, it can be anyone. Therefore, when a company or a business owner is called for a GST Audit, it could possibly be a mistake on their GST return, suspicious claims or transactions, or just happen to be randomly picked.
On the positive side, the GST Audit can help you to comply with the GST rules that may have been overlooked and clarify any doubts on GST treatments. It is through such clarifications that you are educated on the tax rules to avoid future GST mistakes.
Goods and Services Tax Audit by IRAS covers all industries operating in Singapore. The audit aims to ensure that GST registered businesses account for their taxable supplies and purchases correctly and accurately.
Types of GST Audit in Singapore
There are various ways for the GST Audit to be conducted. For desk audit, you could be contacted via;
- letter, or
There is also the possibility of a field audit or visit by a tax officer. This will be done in order to verify some source documents. It is usually more serious when a field audit is conducted.
To ensure that the process goes smoothly you will need to ensure you have all documents like expense reports, sales documents, and inventory pricing and listings, etc. which you used when completing your GST F5 return initially.
These are all important in verifying the figures presented on GST returns and to confirm there are no conflicting figures when verifying the documents and the returns.
File format for Goods and Services Tax Audit
For data listing (e.g. sales, purchases, expenses, etc. listing), IRAS requires the file to be in the following format:
- Microsoft Excel Spreadsheet;
- Microsoft Access; or
- IRAS Audit File or IAF. This is an electronic file with accounting information which can be generated by IRAS approved accounting.
GST Audit Process
While a GST Audit is underway, you can assist in a number of ways to ensure the process goes smoothly. The most important is to give officers total access to business grounds, employees, management, and documents as well as full cooperation with the GST Auditors.
Being prepared and truthful when replying to the questions is extremely important during a GST Audit. As a matter of fact, you can be fined or jailed for interfering with the GST Audit.
It should be noted that audits can take months to more than a year to complete. Factors such as your cooperation during the audit and the size and complication of your business and accounts contribute to the duration of the GST audit.
Notice of Assessment After GST Audit
Whatever the size and nature of your business, you will be informed of the GST Audit's findings via a letter which includes the adjustments to the original assessments, penalties and how you as a business owner can effectively follow GST regulations in the future.
Objection to the Assessment
In the case that you disagree with the results of the GST Audit, you are welcome to file an objection within 30 days. The objection must be in writing (with valid reasons for objection) and addressed to the Comptroller of Goods and Services Tax.
GST Audit Penalties
According to Sections 59 and 62 of the GST Act, the maximum penalty in percentage is 200% for neglect and carelessness and 300% for tax evasion. The fine is $5,000 and $10,000 respectively. As for jail time, it can be up to 3 years for neglect and carelessness and 7 years for evasion when convicted.
The best away to avoid penalties prior to the GST Audit is to simply educate yourself on tax regulation. Make sure you stay up-to-date on any changes or have staff who are familiar with the GST regulations.
It helps if you regularly conduct some GST reviews on your own or with the help of GST professionals.
Some business transactions may have special tax treatment. Discuss them with us and seek our help in declaring them correctly for tax purposes to avoid issues with IRAS later on.