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Tax Audit

Tax Audit

Hit#  1990

testok How to know if your e-Filing Tax Profit pass T'Auditpass

 

  1. Do your bank & cash (avoid huge cash amount) tally with the Accounts in your e-Filing?
  2. ** Is your accounting record kept by double entry (ie not Excel way) that will flag out accounting rules violation?
  3. ** Does your years of taxable profit tally with your visible & invisible assets less liabilities?  Do you trully fall in the lowest B40 category?
  4. ** Is your business Gross Profit % in line with others in the same trade?
  5. Do your expenditure passed the "wholly and exclusively incurred in the production of gross income" test (no personal expenses allowed)
  6. Do you have Income Omission not filed 偷吃要抹嘴 that can be tracked by LHDN?
  7. Do you have separation between Revenue & Capital items?
  8. Do you handle the Period Cut Off issue correctly eg Closing Stock or Work in Progress .. understating amount is a poor way to avoid tax.
  9. ** Can your supporting documents be tracked to the accounting records & are they properly filed.  Are they genuine?
  10. ** By law you must do accounting records with documents to be kept for at least 7 years?
  11. Do you have a tax computation statement in your e-Filing?
  12. LHDN like to query you you130 heronot your acccountant; LHDN loves fine!

wrongbomb6 Wrong Concepts on Tax e-Filing   stress

  1. 1 After e-Filling & payment of Tax .. Job done!!
  2. 2 Paying some tax then ok!
  3. 3 Leave all job to Ac Srv Provider to do it!
  4. 4 Accounting terms is not my problem
  5. 5 E-Filing is in BM which i am not good in BM
  6. 6 My Account is very simple

The key takeaway is after Tax e-Filing there is a pending 7 years Tax Audit.  Here are some facts to note.

  • By law the E-Filing requires preparation of proper accounts supported by documents.
  • Preparation of Accounts have to follow basic Accounting principles and Tax rules. 
  • Tax Audit will assess if your Accounts is properly kept reflecting the true financial state of your business.
  • Finally run through the 12 Tests if you can pass the Tax Audit?
  • Paying don't guarantee there will be no Tax Audit; LHDN will still look at the Accounts at Tax Audit to see if figures submitted tie up.
  • Bending over to pay some tax creates suspicion; you must have something to hide eg sales not recorded.捉虫入肛门

 

  • Most Ac firm clerical staff with low pay have poor thinking skill, moreover Service provider management skill has limitations.
  • Minimum necessary participation from owner: Srv Provider need your input on transactions as only owner knows them 来龙去脉
  • Some level of involvement is necessary because owner must deal with Cash, Bank and Profitability,  moreover LHDN expects owner to know and answer queries  亲力亲围
  • If owner wants to be totally hands off expecting service provider to do detective work to look for answers to transactions without any help or basic record then it is mission impossible ..  it is a pure waste of time and resource to try.
  • In case of such extreme state of affairs, we require a unique way to solve.  The issue will remain whether the result can cross petty auditors & LHDN Tax Audit.
  • Thus it is not uncommon that owners get a shock at a Tax Audit, complaining it is not correct or they don't know . too late lol.
  • You may not be an accountant but as a businessman you have to face these commercial terms.
  • LHDN will use these terms when they audit your tax filing so better get to know now.
  • It is our duty to simplify & help you understand these terms as a layman.
  • Doing Tax E-Filing has little to do with language.  LHDN do allow you to submit in English.
  • Accounting knowledge is prerequisite to fill the form correctly.
  • Owner must learn to understand the forms to check if entry is correct as owner is responsible at submission.
  • Simple or complex accounts must still follow accounting & tax rules, not your rules such as everything match.
  • We will simplify the accounts to make it easy for owners and to reduce human errors.

lnkicon Email Us   

Call or WhatsApp our numbers above

Our service is based on a win-win / common prosperity concept so it will not cost much.
We know making money in Biz if not easy. 

    With our multi disciplined services multiDi contact us partnerIT2 to learn the following:

  1. ** Learn from us in simple way on Accounting process & how it become Tax e-filing Doing this process you know your Weakness and understand your yearly Gross Profit & fixed Overheads.  Its trending will make you feel safesafeok2 to face LHDN query
  2. ** How to simplify your on-site Admin process & Data Feed using the best HR support eg retiree HiW   Our plan is to create a framework to do this job on a permanent basis to save time / money for you.
    Key factor to note here is: only owner knows its business transactions 来龙去脉 (sales, purchases, bank & cash movement + adjustments).
  3. ** Thus we will design ways to capture these information with minimal double work or errors using soft copies or other smart ways.
  4. ** Find the best fail safe On-Site & Off-Site Filing method of documents and Accounting records to satisfy Tax Audit.
  5. Look at your Profitability to see if it match your Tax profile to avoid caught!
  6. Study your awareness and ability to control & manage the business.

 

Sdn Bhd has a added problem of auditing
Most auditors can be petty, bookish & impractical making finalization of accounts difficult!

 

 

 

How can our Ac Service protect poor boss .lnkiconread 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 doing tax computation normally have NO an overall comprehensive defensive plan against LHDN Tax Audit.

Our Unfriendly Business Environment 

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

Read about the lnkicon LHDN's modus operandi

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

 

  

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 genuine; 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

 

Date

19 August 2020

Tags

Manage

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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