30 Nov 2021

Huang Jian (“Huang”), 52, has been convicted by the Court for:

a) Omitting $55,965 of rental income derived from three properties she co-owned with her husband in her Income Tax returns for Years of Assessment (YAs) 2009 to 2012, resulting in a total of $2,850 of tax undercharged

b) Providing incorrect information to reduce her tax liability; and

c) Obstructing the Inland Revenue Authority of Singapore (IRAS) officers from carrying out their investigative duties, the first person to be charged and convicted for doing so.

The Court has ordered Huang to pay a total of $14,160* in penalties and fines for these offences.

First Person Convicted of Obstructing Tax Investigation

IRAS investigators had served an in-person notice on Huang to request for information relating to her tax matters in September 2016. During the inspection, Huang refused to comply with IRAS investigators and locked herself in her bedroom. She also threw relevant documents out of her bedroom window (See photos in Appendix A). Her actions had obstructed IRAS investigators from performing their duties.

Court Sentences

Huang was convicted of four charges under Section 95(2)(a) of the Income Tax Act for omitting rental income from her Income Tax returns without reasonable excuse. The Court ordered her to pay a fine of $4,700 and a penalty of $5,700, twice the amount of tax undercharged.

She was also convicted of one charge under Section 95(2)(b) of the Income Tax Act, for providing incorrect information to the Comptroller of Income Tax without reasonable excuse. She had submitted an incorrect bank statement to support her claim for deduction of mortgage loan interest expenses against her rental income in order to reduce her tax liability. The Court ordered her to pay a fine of $1,500 and a penalty of $1,459, twice the amount of tax undercharged.

For the one charge under Section 65C(1)(b) of the Income Tax Act of obstructing IRAS investigators from performing their duties, the Court ordered her to pay a fine of $800.

Making Claims for Rental Expenses

Rental income received from the letting or subletting of a property is taxable on a net basis after deducting allowable expenses. These are expenses incurred on the property during the period of tenancy and they include property tax, maintenance fees, fire insurance and mortgage interest on loans taken to finance the purchase of the property.

For individuals receiving rental income from the letting of residential properties, they can opt to claim an amount of deemed expenses based on 15% of the gross rent received, in lieu of actual expenses. Where mortgage interest is incurred, the actual mortgage interest can be claimed in addition to the 15% deemed expenses. Alternatively, they can continue to claim expenses based on the actual amount of expenses incurred against the rental income from their residential properties.

Relevant records of the actual expenses claimed must be kept for at least five years for IRAS’ verification upon request. 

Penalties for Non-Compliance

IRAS Warns Against Tax Evasion

IRAS takes a serious view of tax evasion and non-compliance including submitting falsified supporting documents to IRAS or making fictitious claims of expenses in Income Tax Returns. There will be severe penalties for those who wilfully evade tax. The authority will not hesitate to bring offenders to court. Penalties for tax evasion can be up to four times the amount of tax evaded. In certain situations, jail terms may also be imposed.

Penalties for Obstructing IRAS Officers in carrying out their duties

IRAS takes a serious view of any person who attempts to prevent IRAS officers from carrying out their duties. With effect from 29 Dec 2016, the punishment for this offence had been enhanced such that the maximum sentence is no longer just a fine of $1,000. Any person found guilty of such an offence committed on or after 29 Dec 2016 shall be liable on conviction to a fine not exceeding $10,000, and to imprisonment for a term not exceeding 12 months, or to both.

In the case of a continuing offence, offenders may be liable to a further fine not exceeding $100 for every day or part thereof during which the offence continues after conviction.

Reporting 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 or report malpractices can write to:

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

Email: [email protected]

Cash Rewards for Informants

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 will ensure that the identities of informants are kept strictly confidential.

Inland Revenue Authority of Singapore

Appendix A

*Updated amount provided by State Court on 1 Dec 2021