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Tax Audit

Tax Audit

Hit#  707

Reasons why most bureucrats in democratic economy have no empathy for the small business people. 

  • They imagine that all business people easily make plenty of money, no most of them are in the the B40 group.
  • They can't see these people working hard from early hours to dusk.
  • They can only see life from their 9 to 5 easy iron bowl job 
  • Their reward system is based on their KPI performance that play on the mistakes & weakness of others.

The truth is these small people live from hand to mouth.  They constantly rely on Ah Long / loan shark to finance the money shortfall unlike the rich corporations where banks support.

Reason for this type of mindset

  • The capitalist economy creates & drive a materialistic world.
  • The lack of good human values education in school ensure this state.
  • This is compounded by the peer pressure of the rich that can show off.
  • This also driven by the democratic system with pump up sense of freedown and you can vote  .. does it really work.
The Seven 7 Years Fear

Most bosses of small business, with day to day pressing headaches, face two main hurdles: Daily Cash Flow and unforeseen Heavy Tax, Fines and Legislative Dues.

Tax Department, on the other hand, new main job is Tax Audit.  They are doing a good job because they have a System to support their work ... but who will support the small company?

The sad story: Owners the target have to answer all tax queries, no one can really help you .. so know your business to face the pressure!

Officials with power to punish, lives in the clouds are out of touch with the hardship of small people toiling from dawn to dusk in their hand to mouth small business. Moreover with conflict of KP1 interest, these Tuan Besar tends to be easy with Punishment & Fines.  This stance keep the Rakyat on their toes; the detrimental effect is the essential SME economy comes to a halt.rip3


How can our Ac Service protect poor boss .click ►read AcService
A TOTAL Comprehensive guided Ac System (fromstart to finish):  Ultimate purpose of Ac to ensure SAFE LHDN Tax Audit.

Possible Bad Outcome in Tax Audit

  • Difficulty in answering the lengthy tax audit query compounded with no proper documention
  • Fine due to wrong entry or just Add back that revise Tax Compution

If Bad, Whose fault?

  • Accounting staff
  • Auditor
  • Boss's wrong attitude towards Ac Records & Tax
  • Tax Agent or
  • The Accounting System

*AcService Integrated Internal Tax Audit ensures safe LHDN'tax audit (7 years once) qc

  • Full Integration from Data Entry, to Statutory Audit (if limited company) & finally to tax filing.
          Start Right (from data entry) End End (safe tax audit)
  • Gross Profit Trending Assessment
  • Ensure valid Documentation is safely Filed
  • Ensure no trace of any Income Omission
  • Appropriate Tax Computation with sensitive add back focus
  • Continous tracking of dues or LHDN requirements such as PCB, E, etc 

M   Note: Tax Agent do tax computation normally do not have an overall comprehensive defensive plan against LHDN Tax Audit.




Walk through a Tax Audit process

It start off innocently with LHDN asking for a long list of documents for 3 years or more from the last 7 years of your company's operation.  This audit will surely happen if you are doing business.  Your filing of yearly tax return or with paying tax, big or small does not matter; you will still be audited and with a fine comb comb

Your Auditors Statement trueFair carries no weight.  Boss have to personally fight it out yourself.

The  list itself is already quite threatening especially for small companies with

  • low salary staff that hops from job to job,
  • poor records being kept,
  • records with incomplete or wrong documentation.

An pro  Account should provide all the necessary soft copies of record.  But you still have send to LHDN boxes of documents that tracks to the entries in your records.  Here the problem starts if you have not been tracking to the record or tracking documents are missing.

One favorite request is a List of Purchases from all your suppliers. The guys want to see if purchases are gunuine; do your App provide this list?








Finally at end of Walk, one way or another there will be some ADD-BACK of expenses.  The sad part is Add-Back comes with hefty penalty too. They will however sweeten the pill by "gracefully" allowing settling by INSTALMENTS.

Conflict of Interest from their KP1 kpi


Be aware:Awas List

  • They will not accept your Tax Agent Tax Computation
  • They can't understand that many expenses are "wholly and exclusively" relate to "making gains" and are essential or else there is no gain to be taxed. 
  • Balance Sheet's big picture showing Insolvent state of company is ignored.
  • Difficulty of making money in business & its risks are also not appreciated by arm chair cloud; a new start up if lucky takes years to make some money.  Many new start ups soon collapse because they don't have an iron rice bowl from above.
  • Grey Classification of expenses is an area of dispute; one favorite to add-back personal expenses like travelling, entertainment even if they are genuinely claimed by marketing personnel. 
  • Hefty Fines + Additional Tax comes as a package once add-back is stroked up!






So what can the poor boss do  字两个口  ?

  • Foremost, believe you are slogging a honest livelihood .. keep your head upright!
  • Don't be cowed to 大耳窿 and pay off the easy way out.  
  • Worst case scenario, wind up be a bankrupt as way out!



◄Back to portsum1 Biz Practices



19 August 2020



Bosses' Worries

  • Cash Flow, AP/AR Aging, CBT
  • SST/GST Accounting & Returns
  • Salary/Daily Workers Accounts
  • Tax Estimation CP204/500
  • Operation/Project: Gross Profit%
  • Staffing / HR Turnover Problems
  • Legal Deadline, Comply & Fines
  • Government Audit (Tax/GST/SST)
  • Operation Control (HR/Reports)
  • Future of your Business . SWOT

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