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For companies

If you have failed to pay or paid late

While most taxpayers pay their taxes on time, there are some who fail to do so each year. Penalties are imposed on taxpayers who do not pay on time .

Taxpayers have one month from the date of the Notice of Assessment (NOA) to pay the tax. When payment is not received by the due date, a 5% penalty and subsequently a 1% additional penalty can be imposed on the overdue tax.

A taxpayer whose GIRO instalment plan is cancelled will also have a 5% penalty imposed immediately on the unpaid outstanding tax. The instalment plan may be cancelled due to:

  • Insufficient funds in the bank account
  • Deduction amount exceeds the bank limit set by taxpayer with his bank for GIRO deduction, etc. In such instances, IRAS will inform the taxpayer that the GIRO plan is cancelled.

When the 5% penalty has been imposed, a Demand Note showing the unpaid tax and penalty will be issued. Payment has to be made by the due date stated in the Demand Note.

Example:

Business Y received a Notice of Assessment (NOA) dated 23 Aug 13. The due date for payment was 23 Sep 13 (one month from the date of NOA). As the tax payable is $10,000 and payment was only received on 30 Sep 13, a 5% penalty of $500 was imposed.

 

Notice of Assessment Date Notice of Assessment Due Date Payment Date Tax Amount  5% Penalty

23 Aug 13

23 Sep 13

30 Sep 13

$10,000

$500

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Am I still responsible for my company’s tax matters if I have appointed a tax agent?

If you engage the services of a tax agent to deal with your business’ corporate tax matters, you as a director or principal officer, are still responsible and liable for the filing and payment issues in the event that the agent failed to fulfil his responsibilities.

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What should I do if I receive a Demand Note?

You should pay the tax and 5% penalty by the due date stated in the Demand Note. If payment is not received, further enforcement actions may be taken.

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Why is my company penalised for not paying the tax when I have objected to the tax?

Even if you object to the tax assessed, you still have to pay the tax as shown on the Notice of Assessment (NOA) by the payment due date.

If the tax is subsequently amended, excess payment made will be refunded to you.

Example:

Business X received an estimated NOA, with a tax payable of $10,000, dated 23 Aug 13. The due date for payment was 23 Sep 13 (one month from the date of NOA). The company filed an objection and did not make any payment. As no payment was received, a 5% late payment penalty of $500 is imposed.

The company made payment for the tax and penalty on 10 Feb 13. On 8 Mar 13, the Assessment was amended to $1,300 and the late payment penalty is revised to $65 (5% penalty on $1,300) accordingly. Excess payment amounting to $9,145 is refunded to the company.

 

Notice of Assessment Date Notice of Assessment Due Date Payment Date Tax Amount  5% Penalty

23 Aug 13

23 Sep 13

10 Oct 13

$10,000

$500

08 Nov 13

23 Sep 13

-

($8,700)

($435)

Revised Tax and 5% Penalty

$1,300

$65

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What should I do when my company has difficulties paying and I wish to appeal for instalments?

You may call (65) 6356 7012 before the payment due date for us to review your financial situation and agree on the best arrangement for you to pay your tax. Please note that instalments usually include the imposition of 5% late payment penalty. Additional 1% penalties may be imposed, depending on the number of instalments granted, up to a maximum of 12 instalments. The company’s compliance in its filing and payment matters is a major factor in the review of the company’s appeal.

If you wish to appeal for instalments, please prepare the following documents to substantiate your claims before contacting us:

  • Latest bank statements;
  • List of debtors; and
  • Any other documents to prove the company’s financial position.

Please provide us with the necessary information and documents within the timeframe given. Otherwise, further enforcement recovery actions will be taken. 

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What should I do if my company’s instalment plan is cancelled and penalty has been imposed?

You would need to pay the tax and penalty in full by the due date of the Demand Note. If payment is not received, further enforcement actions can be taken.

If you wish to continue paying by instalments, you may call us on (65) 6356 7012 for us to review your request. Please note that the revised instalment plan will include the 5% penalty.

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Can the company appeal to waive the penalty?

Generally, penalties will not be waived unless there are exceptional circumstances.

IRAS may consider your appeal if the following conditions are met:

  • The overdue tax was paid within 14 days from the date of Demand Note; AND
  • The company did not file or pay late in the last two years.

In addition to the above, we recognize that there may be events beyond the company’s control which resulted in the late payment. If documentary proof is provided, we may be prepared to waive the penalty in the following circumstances:

 

Circumstances Documents Required by IRAS

Notice of Assessment was sent to wrong address though the company had changed their address with ACRA

Latest ACRA Biz-file extract

Lost cheque Bank Statement and lost cheque number
Paid through telegraphic transfer before due date Telegraphic transfer notice

Companies who sign up for GIRO for future payments will be considered more favourably in their appeals.
Please call (65) 6356 7012 with the supporting documents to appeal for waiver.

Subsequently, to confirm that the penalty has been waived, you may log in to myTaxPortal under “View Accounts Summary” to check.

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What may happen if the tax and penalty is not paid by the Demand Note due date?

We may, without prior notice, take action to recover the overdue tax, for example:

  • Appoint the company’s bank, tenant, lawyer, etc. as agent to pay the money to us;
  • Impose an additional penalty of 1% on the overdue tax for each month that the tax remains unpaid; and
  • Take legal action.

Please note that appointment of your company's bank, tenant, lawyer, etc. as agent will happen before the 1% additional penalty is imposed.

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What can the company do to get the bank appointment released?

The bank can be released as agent only after the overdue tax and penalty are paid. Therefore, this can be either:

  • After the bank pays the full amount to IRAS; or
  • After the company paid the full outstanding amount to IRAS. If you have settled the tax, please call (65) 6356 7012 to inform us so that the appointment can be released early.

Please note that banks do not process requests for release on Saturdays, Sundays and Public Holidays. Any request for release received after 2pm on weekdays (Mon-Fri) can only be processed the next working day.

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When will a 1% additional penalty be imposed?

A 1% additional penalty may be imposed 60 days after the 5% penalty is imposed, if the tax is still not paid.

The 1% penalty is imposed for each month that the tax remains unpaid. The total additional penalty will not exceed 12%.

Example:

The company received a Demand Note dated 6 Jun 13. The due date for payment was on 6 Jul 13 (one month from the date of Demand Note). The tax payable is $10,000 and payment was only received on 15 Sep 13.

In this instance, the payment was overdue by more than 2 completed months. Hence, there was a 5% penalty of $500 and a 1% additional penalty of $200 imposed. Therefore, the total penalty imposed was $700.

Please note that the appointment of company’s bank, tenant, lawyer, etc. as agent will happen before the 1% additional penalty is imposed.

 

Demand Note Date Demand Note Due Date Payment Date Tax Amount  5% Penalty Additional 1% Penalty 

6 Jun 13

6 Jul 13

15 Sep 13

$10,000

$500

$200

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How can the company check its tax balance?

You may log in to myTaxPortal under “View Accounts Summary” to check your current balance.

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How do I pay the tax and penalties?

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Last Updated on 3 March 2014


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