Audit discrepancies (Annual Report 2006)

You are here: Home › About us › Reports › Annual Report › Annual Report 2006 › Part two - Delivering on our outcomes

About us
E pa ana ki Te Tari Taake

Annual Report 2006: Part two - Delivering on our outcomes

Audit discrepancies

The level of audit-assessed discrepancies is an important measure of the effectiveness of our audit work. Discrepancies are the difference between the tax ascertained as a result of our audit activity and that previously returned or ascertained by the taxpayer, plus penalties and interest.

In 2005-06 we identified an additional $980 million in audit discrepancies. A significant portion of this related to tax avoidance and evasion cases ($326 million).

Figure 12 -
Audit discrepancies - actual versus budget

Actual
2004-05
$ million

Budget
2005-06
$ million

Actual
2005-06
$ million

Non-business and business audit

$254

$310

$297

Aggressive tax issues

$165

$105

$254

Tax evasion and fraud

$76

$53

$72

Corporates

$268

$321

$357

Total

$763

$789

$980

NOTE:

Net discrepancies = gross discrepancies less timing adjustments (these adjustments are for errors found in a filed return for one period, but in fact are claimable in another).
Not all net discrepancies result in immediate tax liability or payment of additional tax. Adjustments to losses have an impact on current or future tax, and imputation credit adjustments similarly affect future tax liabilities. For 2005–06:

Net total discrepancies	$980 million
Less loss reduction adjustments	$217 million
Less imputation credit adjustments	$76 million
Additional tax assessed	$687 million