The Inland Revenue Authority of Singapore (IRAS) conducts audits to ensure tax compliance across individuals and businesses. While some audits are random, many are triggered by certain tax reporting red flags. This guide outlines the most common triggers for IRAS audits in Singapore and how you can avoid them in 2025 and beyond.
Become Our Featured Tax Expert.
This premium ad space is reserved for one tax professional. Put your firm in the spotlight and reach qualified Singapore leads directly.
To claim this exclusive spot, contact us at [email protected].
📌 Why Understanding Audit Triggers Matters
IRAS uses data analytics, third-party information, and compliance history to identify high-risk cases for audits. Being aware of common audit triggers can help you review your tax filings, reduce errors, and avoid unnecessary scrutiny.
🔍 Top Red Flags That May Trigger an IRAS Audit
- Large Year-on-Year Income Changes – A sudden spike or drop in reported income without clear explanation may prompt a review.
- Unusually High Tax Deductions – Excessive claims for business expenses, donations, or personal reliefs may attract attention.
- Mismatch in Third-Party Data – Discrepancies between your tax return and information from employers, banks, or CPF records can trigger an audit.
- Late or Incomplete Tax Filings – Filing past deadlines or omitting required sections increases audit risk.
- GST Reporting Anomalies – Frequent GST refund claims, incorrect GST rate application, or mismatched input/output tax records are red flags.
- Persistent Loss-Making – Businesses declaring losses for multiple consecutive years may face closer inspection.
- Inconsistencies in Overseas Income Reporting – Failing to declare taxable foreign income may lead to investigation.
- Cash-Heavy Transactions – High volumes of untraceable cash transactions without proper documentation can raise suspicion.
📄 How IRAS Detects Red Flags
- Cross-checking tax filings with employer-submitted IR8A forms
- Matching GST submissions with business revenue patterns
- Comparing CPF contribution records against reported salaries
- Using AI and analytics to detect anomalies in expense patterns
- Reviewing bank transaction data for suspicious flows
✅ Best Practices to Avoid Unwanted Audits
- File your taxes accurately and on time.
- Keep supporting documents (receipts, invoices, bank statements) for at least 5 years.
- Ensure deductions and relief claims are valid and supported.
- Declare all taxable income, including overseas earnings.
- Work with a qualified tax professional to ensure compliance.
⚠️ Consequences of Being Audited
If IRAS finds inaccuracies in your tax return, you may face:
- Additional tax assessments
- Penalties up to 200% of tax underpaid
- Prosecution in cases of deliberate tax evasion
📌 Final Takeaway
Most IRAS audits are avoidable if you maintain accurate records and ensure that your tax returns are consistent, honest, and well-documented. By understanding audit red flags, you can take proactive steps to safeguard your financial reputation.
