Avoiding an IRD Audit

Many people fear being audited by the IRD. Even if you haven’t done anything obviously wrong, an audit may reveal innocent errors that lead to penalties and interest being charged. The audit process is also likely to be time consuming and disruptive. There are some red flags that are likely to increase your chances of being audited. These can include factors like:

• Differences between your taxable income and accounting income.
• Low levels of drawings.
• Overdue tax.
• Overdue returns.
• Unusual ratios or numbers in your accounts compared to other years or compared to other businesses in the same industry.
• Unusual refund history.

There are many other factors that may trigger an audit, and sometimes the factors are relatively random.

In order to minimise the chance of a costly, disruptive audit it is important that your accounts are accurate and that they make sense from the IRD’s point of view. If you would like to discuss your situation please contact us.

Kristina Andersen
Andersen Accountants Limited
Telephone: 09 3695198
Email: Kristina@andersen.co.nz
Website: www.andersen.co.nz