We conduct audits as part of our investigations program to ensure that our clients are paying the correct amount of tax, duty or royalty. We also check that clients receiving a grant are eligible.
Some of the ways we identify who to audit include:
- data matching
- information received from the public
- referrals from other government agencies
- random sampling.
Preparing for an audit
In most cases, our auditor will telephone you to:
- arrange a time and place for an initial interview
- explain the audit process
- advise you which records will be inspected
- give you an indication of how long the audit will take.
The auditor will usually allow a reasonable time for you to prepare records and will confirm these arrangements in writing.
- take note of the name and telephone number of the auditor
- make sure you understand which records we need to see
- review the records before the auditor arrives to see if you have made any unintentional errors.
A voluntary disclosure to the auditor will save time and generally result in a lesser penalty.
You may wish to seek professional advice if you are dealing with complex matters.
Your legal obligations
You are obliged to provide our auditors with documents (unless they are subject to a valid claim for legal professional privilege) or other information when asked.
Our auditors have the authority to:
- enter public places and places of business during their normal opening hours
- enter residential premises with consent (or a warrant)
- inspect, copy and seize documents and things.
Generally, we will work with you to receive the correct information without needing to exercise our powers.
Before the audit
You have the right to ask the auditor:
- for a reasonable time to produce your records
- about the time and place for the audit
- to provide a letter confirming the audit arrangements.
During the audit
During the audit, we will normally interview you and examine your records to see if they comply with the revenue laws. Any information we obtain through an audit is treated confidentially—it will only be disclosed for limited purposes prescribed by law.
You have the right to:
- see the auditing officer’s identification
- involve your accountant or legal adviser
- receive auditor conduct that is professional and courteous
- be asked clear questions
- ask how long the audit will take
- receive a copy of any formal record of interview
- receive a receipt for any records taken from your office.
After the audit
You have the right to:
- receive a full explanation of any adjustments made as a result of the audit
- explain reasons for any irregularities or issues
- receive an explanation of how and why any penalties and interest have been applied
- discuss the audit with the auditor’s supervisor.
You also have a statutory right to:
- expect your affairs to be treated confidentially
- object and appeal.
In some circumstances, penalty tax will apply at a rate of 75%. Unpaid tax interest may also apply.
For royalties, unpaid royalty penalty and unpaid royalty tax interest may apply.
Cancellation or suspension of registration
Under section 469A of the Duties Act 2001, the Commissioner of State Revenue may suspend a self assessor’s registration immediately where:
- grounds for suspension and cancellation exist, and the Commissioner believes it is necessary to protect the integrity of the online self assessment system, OSRconnect
- the Commissioner believes there is an unacceptable risk the self assessor will not comply with an obligation under the Duties Act or the Taxation Administration Act 2001.