If you have failed to pay or paid late
While the majority of taxpayers file their taxes on time, without any enforcement action, each year, a minority fails to do so. Those who have failed to comply with their filing obligation will be penalised.
Taxpayers are given 30 days from the date of the Notice of Assessment (NOA) to pay the tax. If the tax is not paid or is paid late, the following penalties will be imposed on the tax unpaid after due date:
- 5% penalty
- 1% additional penalty
A taxpayer whose GIRO instalment plan is cancelled will also have a 5% penalty imposed on the unpaid tax. The instalment plan may be cancelled due to:
- Insufficient funds in the bank account
- Deduction amount is higher than the bank limit set by you
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 12. The due date for payment was 23 Sep 12 (1 month from the date of NOA). As the tax payable is $10,000 and payment was only received on 30 Sep 12, a 5% penalty of $500 was imposed.
| Notice of Assessment Date |
Notice of Assessment Due Date |
Payment Date |
Tax Amount |
5% Penalty |
23 Aug 12
|
23 Sep 12
|
30 Sep 12
|
$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. Otherwise further penalties may be imposed and recovery actions will 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 12. The due date for payment was 23 Sep 12 (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 12. On 8 Mar 12, 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 12
|
23 Sep 12
|
10 Oct 12
|
$10,000
|
$500
|
08 Nov 12
|
23 Sep 12
|
-
|
($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 get ready 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 once the deadline has passed.
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What should I do if my company’s instalment plan is cancelled and penalty has been imposed
You have to pay the tax and penalty in full by the due date of the Demand Note. Otherwise, further recovery actions will be taken.
If you wish to continue paying by instalments, you may call us at (65) 6356 7012 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.
However, IRAS may be prepared to consider your appeal if you fulfil the following conditions:
- The outstanding 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, recover the outstanding tax by:
- Appointing the company’s bank, tenant, lawyer, etc. as agent to pay the money to us;
- Imposing an additional penalty of 1% on the outstanding tax for each completed month that the tax remains unpaid; and
- Taking legal action.
Please note that appointment of your business’ bank, tenant, lawyer, etc. as agent will happen before 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 outstanding tax and penalty are paid. Therefore, this can be either:
- After the bank remits the outstanding amount to IRAS. The release may take a few days to process, therefore, to expedite the release, please call (65) 6356 7012; or
- After your business has arranged to pay the tax and penalty directly to IRAS. Please call (65) 6356 7012 to inform us so that the appointment can be released as soon as possible.
Please note that banks do not process requests for release on Saturdays, Sundays and Public Holidays.
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When will a 1% additional penalty be imposed
A 1% additional penalty may be imposed 60 days from the due date of the Demand Note if the tax is still not paid.
The 1% penalty is imposed for each completed month that the tax remains unpaid. The total additional penalty will not exceed 12%.
Example:
The company received a Demand Note dated 6 Jun 12. The due date for payment was on 6 Jul 12 (1 month from the date of Demand Note). The tax payable is $10,000 and payment was only received on 15 Sep 12.
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 12
|
6 Jul 12
|
15 Sep 12
|
$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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