Under the self-assessment system every corporation and taxable individual or trust is required by law to file an annual return of income in prescribed form and to determine the taxes payable for the year.After initial assessing and correction of obvious errors made in completing the return, and after the completion of the matching program which matches certain information in the return with from other sources the return may be selected for audit.

The income tax act requires taxpayers to keep such records and books of accounts as are necessary to determine the taxes payable and authorizes the department to audit these for any purpose related to the enforcement or administration of the act.

To this end, the act further authorizes the department to request and receive from any person information, records, documents etc. within a reasonably stipulated time-frame. Under the act, the Department may reassess Tax returns at any time up to 6 years after the end of the year in which the return was furnished. The Department's audit program is directed mainly at corporations and trusts as well as those indidviduals deriving income from businesses and professions.

Wage and salary earners present relatively few compliance problems.For the most part their taxes are collected through payroll deductions and their incomes are readily verified by reference to information filed by their employers.The requirement to maintain books and records has little application to these taxpayers and, save for certain cases, such as when the deduction of some expenses from wages and salaries may be permitted, there is little need for audit activity.The Department’s audit program is directed mainly at those individuals deriving income from Business and Professions, as well as Corporations and Trusts.