Annual Report 2008: Part two - Key business results
Revenue identified through audits
Our audits verify whether a taxpayer has paid the right amount of tax. Where we have found that there is a difference, or discrepancy, between the tax self-assessed by the taxpayer and the liability determined by an audit, we issue a new assessment. If applicable, penalties and interest are added. Discrepancies identified may fluctuate from year to year, depending on the effect of large cases that impact on the total. Nevertheless, discrepancy levels are an important indicator of our effectiveness in identifying and then addressing non-compliance.
Discrepancies
In 2007-08 discrepancies were very high because there were exceptionally large imputation credit adjustments ($681 million). Imputation credits are passed from companies to their shareholders to prevent tax being paid twice on dividends.
| Actual 2006-07 $ million |
Budget 2007-08 $ million |
Actual 2007-08 $ million |
|
|---|---|---|---|
| Non-business and business audit | 262 | 323 | 338 |
| Aggressive tax issues | 247 | 122 | 313 |
| Tax evasion and fraud | 128 | 62 | 75 |
| Large Enterprises | 359 | 347 | 723 |
| Total | 996 | 855 | 1,449 |
Notes
- Net discrepancies = gross discrepancies less timing adjustments (these adjustments are for errors found in a filed return for one period, but 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 2007-08:
| Net total discrepancies | $1,449million |
| Less loss reduction adjustments | $117 million |
| Less imputation credit adjustments | $681 million |
| Additional tax assessed | $651 million |
The non-business and business audit category in figure 12 includes discrepancies detected in our three-year property transaction programme. This year, we assessed additional tax of $15.0 million from our property programme work and $111.5 million from our business as usual audits of property transactions. The programme is discussed in detail in Part three of this report.
Voluntary disclosures and credits
Some taxpayers make voluntary disclosures of under-reported tax before or during an audit. These disclosures will result in the application of lower shortfall penalties and are actively encouraged. In 2007-08 1,362 disclosures were made (virtually the same as last year) and the value was $292.7 million, $172.1 million more than last year. The increase was mainly from large enterprises.
An audit may also find that a taxpayer should actually receive a credit or refund. In 2007-08 $18.8 million was refunded or credited to taxpayers.
Date published: 15 May 2009
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