New Asia Academy Pte Ltd, a private school providing higher educational learning and training courses, was ordered to pay a penalty of $64,188.07 and a fine of $6,000 for not registering its business for Goods and Services Tax (GST).

Under the law, it is compulsory for a business with annual taxable business turnover exceeding $1 million to register for GST. A GST-registered business is required to charge GST on its sales and can offset the GST it pays on its purchases before it accounts the net difference to IRAS.

Businesses are required to regularly assess whether they need to be registered for GST. In most cases, registering for GST is compulsory when the business’ taxable turnover for the past 4 quarters is more than $1 million or when the business’ taxable turnover for the next 12 months is expected to exceed $1 million. Businesses need to apply for GST registration within 30 days of the date on which the liability to register for GST arises.

IRAS’ investigations revealed that New Asia Academy’s taxable turnover for the 4 quarters ended 30 Sep 2007 exceeded $1 million. It failed to register for GST within 30 days of the end of the quarter i.e. 30 Oct 2007 and was only registered for GST with effect from 1 Aug 2009. Consequently, New Asia Academy did not account for the GST amounting to $641,880.67 on the $9.8 million of taxable turnover from its customers between 1 Dec 2007 and 31 Jul 2009.

In addition to paying the GST to IRAS, New Asia Academy has to pay 10% penalty of the tax, which amounted to $64,188.07 and a fine of $6,000.

Penalties for Failure to Register for GST

IRAS would like to remind businesses that they need to be aware of GST registration rules, constantly monitor their taxable turnover and ensure that they promptly register for GST when their turnover exceeds $1 million per year. IRAS carries out regular audit programmes to identify cases that are liable for compulsory GST registration.

If a business that is required to register for GST fails to do so within the required time, it may be liable to a fine of up to $10,000 and a penalty equal to 10% of the tax due from the date on which the business is required to apply for GST registration. The business’ effective date of GST registration will be back-dated to the day that its liability to register arose. Consequently, the business will have to make good and pay the GST to IRAS on all its past transactions since the effective date of registration, even if it had not collected the amount from its customers.

Voluntary Disclosure Programme

Businesses and individuals could have made mistakes in their tax returns because they were negligent or were unclear about their tax obligations. IRAS does not view such mistakes as tax evasion. Should businesses or individuals discover any errors or omissions, IRAS encourages them to come forward voluntarily so we may help them resolve the issues. IRAS will reduce the penalties for such voluntary disclosures. More information on the Voluntary Disclosure Programme is available in IRAS’ e-Tax Guide (PDF, 476KB).

Taxpayers who wish to disclose errors made in their declarations can write to:

Inland Revenue Authority of Singapore
Investigation & Forensics Division
55 Newton Road, Revenue House
Singapore 307987
Email: [email protected]

Inland Revenue Authority of Singapore