Insurance agent convicted for filing incorrect returns and failing to register for GST

27 Nov 2019

Chew Wai Ling (“Chew”), 56, an insurance agent, was ordered to pay fines and penalties totalling $663,008 after being found guilty of making incorrect personal income tax returns without reasonable excuse, as well as failing to register for Goods and Services Tax (“GST”).

Chew faced two charges under section 95(2)(a) Income Tax Act of making incorrect returns without reasonable excuse by omitting total commission income of $1,955,232 from her personal income tax returns for Years of Assessment (YAs) 2009 and 2010.

In addition, Chew faced one charge under section 61(a) of the GST Act for failing to notify the Comptroller of GST of her liability to register for GST by 30 January 2008, which had resulted in Chew failing to account for GST totalling $320,412.

 

Court Sentences

For the two charges of making incorrect returns without reasonable excuse, Chew was fined $6,000. In addition, the Court ordered Chew to pay a penalty of $621,967, which is two times the amount of income tax undercharged.

For failure to register for GST, the Court fined Chew $3,000 and ordered her to pay a penalty of $32,041, a sum that is 10% of GST due.

 

IRAS' audit programme uncovered the offence

IRAS runs regular audit programmes across various industries to ensure tax compliance among businesses and the self-employed. Using data analytics and advanced statistical tools, IRAS is able to cross-check data and detect anomalies. This case was uncovered through one such audit programme.

Investigations revealed that Chew did not declare her commission income received as an insurance agent for YA 2009 and 2010 in her individual income tax returns. Investigations also revealed that Chew had made taxable supplies the value of which exceeded $1 million in the 4 quarters ending 31 December 2007. Hence, she was required to notify the Comptroller of GST by 30 January 2008 of her liability to register for GST. However, she failed to do so by the due date.

 

Penalties for Non-Compliance

Income Tax for Commission Agents

All income earned in or derived from Singapore, including income earned from one’s trade, profession or vocation, is chargeable to income tax.

Commission agents such as insurance or property agents receiving commission for their services must report their commission income as part of their total personal income in their returns.

IRAS takes a serious view of non-compliance. There will be penalties for those who make incorrect returns without reasonable excuse or through negligence. Taxpayers are ultimately responsible for the information declared in their income tax returns. IRAS will not hesitate to bring offenders to court. The penalty for making incorrect returns without reasonable excuse or through negligence is two times the amount of tax undercharged. In certain situations, jail terms may also be imposed.

 

GST Registration

All businesses, including individuals deriving income from their trade, profession or vocation, should closely monitor their income and regularly assess if they need to register for GST. If their past 12-month taxable turnover has exceeded $1 million at the end of any calendar quarter, they are required to apply for GST registration within 30 days.

Any business that fails to register for GST is still required to pay GST on all their past transactions from the date the business became liable for GST registration. GST is payable even if the amount was not collected from customers. In addition, failure to register for GST is an offence and businesses may be required to pay 10% of GST due as a penalty, and fined up to $10,000.

IRAS regularly conducts audits to identify businesses that fail to register for GST. Over the past three years, IRAS has audited 400 businesses that have failed to register for GST and recovered $53 million in GST and penalties.

 

Reporting or Disclosure of Malpractices

Businesses or individuals are encouraged to immediately disclose any past tax mistakes. IRAS will treat such disclosures as mitigating factors when considering action to be taken. Those who wish to disclose past mistakes, reveal evaded taxes, or report malpractices that might indicate tax evasion, can write to:

Inland Revenue Authority of Singapore
Investigation & Forensics Division
55 Newton Road, Revenue House Singapore 307987

Email: ifd@iras.gov.sg


Cash Rewards for Informant

A reward based on 15% of the tax recovered, capped at $100,000, would be given to informants if the information and/or documents provided lead to a recovery of tax that would have otherwise been lost. All payments are at the discretion of the Comptroller. IRAS would ensure that the identities of informants are kept strictly confidential.

     

Inland Revenue Authority of Singapore