Hi guys

Need some advice.

Just got a letter from IRB to provide proof of documents for certain items like parents medical, sports, magazine subscription, dividend vouchers etc for last year's income declaration.

My question is,

1- I have overstated some deductions, ie cannot be substantiated by receipt, I know I will attract a recalculation and possibly a penalty. How much is the penalty?

2- they have asked for documents for 2011 only. Will my providing or meeting up with them will attract them to audit into previous years as well?

3- fearing for scenario 2 above, should I just ignore the notice, let them do their automatic recalculation ie voiding my declared deductions and possibly add on a penalty, if no response within 21 days as was stated in their letter. I then pay whatever is the recalculated assessment? This tactic avoids meeting the tax officer which may attract further scrutiny. What do you guys think?

Thanks

Then it looks like whether I submit now or later, it makes no difference. I will be audited for previous year's declaration anyway.

For discussion sake, it's always been said and advised that one should not buy assets with cash which may attract immediate attention from IRB. I really wonder how true this statement is or is just a myth.

Granted, IRB can do a random check or otherwise get info from a tip off but is IRB itself alerted by some sort of trigger that when you buy a car or house in cash, you get audited from IRB.

What I meant was how does IRB know when you buy assets in cash, whether you declare your income truthfully or not. Tip off is one but I can't comprehend that when people say, better don't buy cash if your taxes are not in order bcos IRB will know. How?

Yes, when you sell property, there is a chkt form but that's for seller to be assessed if he needs to pay rpgt. How does that form trigger IRB to the buyer who bought cash? Also, I may buy the property in cash now, I then refinance later, when I sell, in my chkt, I still have an interest paid deduction as well, so, it looks proper too.

I've just looked at the chkt form, yes, it contains the acquirer's details and income tax file number but it doesn't ask if the acquirer is paying cash or paying via a bank loan

This post has been edited by kuntakinte: Nov 16 2012, 04:24 PM