Penalties for filing a wrong return

Offences for filing a wrong return

A person who files a wrong return due to negligence or without reasonable excuse can be brought to court. If convicted under Section 95, the person may pay a penalty up to two times the amount of tax undercharged. A fine or an imprisonment will also be imposed.

If a person is found to be evading tax, he can pay a penalty up to three times (if convicted under Section 96), or up to four times (if convicted under Section 96A) of the tax undercharged. A fine or an imprisonment will also be imposed.

Informing IRAS voluntarily on the omissions or errors made

Why you should inform IRAS voluntarily

Instead of imposing maximum penalties of up to 200% of tax undercharged for submission of incorrect Income Tax returns due to negligence or without reasonable excuse, IRAS is prepared to waive the penalty or accord a reduced penalty of 5% p.a. for first-time voluntary disclosures which meet the qualifying conditions under the IRAS Voluntary Disclosure Program.

For Income Tax, penalty waiver is granted for voluntary disclosures made within a 'grace period' of 1 year from the statutory filing date. After the lapse of the 'grace period', IRAS will impose a reduced penalty of 5% for every back year the disclosure was untimely, on an incremental basis.

Examples:

1) Rental Omission in YA 2008

Taxpayer omitted to declare rental income received in 2007. He voluntarily disclosed the omission to IRAS on 1 Apr 2009. Assuming he has met all the qualifying conditions under the Voluntary Disclosure Program, the penalty treatment is as follows:

• Since taxpayer came forward during the grace period of 16 Apr 2008 to 15 Apr 2009, IRAS will grant a one-time waiver of penalty.
• If taxpayer makes the disclosure after 15 Apr 2009, the penalty would be 5% of the tax undercharged.

2) Rental Omission in YA 2006

Taxpayer omitted to declare rental income received in 2005. He voluntarily disclosed the omission to IRAS on 1 Apr 2009. Assuming he has met all the qualifying conditions under the Voluntary Disclosure Program , the penalty treatment is as follows:

• If taxpayer had came forward during the grace period of 16 Apr 2006 to 15 Apr 2007, he would have been entitled to a one-time waiver of penalty.
• However, because the disclosure was untimely, IRAS will impose a penalty of 10% of the tax undercharged.
• If taxpayer makes the disclosure after 15 Apr 2009, the penalty would be 15% of the tax undercharged.

How to inform IRAS

1. By post:
   
   Inland Revenue Authority of Singapore
   55 Newton Road, 4^th storey, Revenue House
   Singapore 307987
   
   Attention to: Individual Income Tax Division - Ruling and Compliance Branch
   
   
2. By email