Consequences for late payment or non-payment of taxes
Taxes are payable notwithstanding you may have lodged an objection to the assessment.
IRAS may take the following actions if you fail to pay by the due date:
- Impose late payment penalties
- Appoint agents like the estate’s bank, tenant or lawyer to recover the overdue tax
- Take legal action
The above list is not exhaustive.
Late payment penalty
Unless you are on an approved instalment plan, a 5% late payment penalty is imposed on the unpaid tax if full payment is not received by the due date of the tax bill.
Example 1: Penalty imposed for late payment
Trustee X received an NOA dated 1 Jun 2020. The due date for the tax payable of $10,000 is 1 Jul 2020 (one month from the date of NOA). As Trustee X did not pay the tax by 1 Jul 2020, a 5% late payment penalty of $500 (i.e. 5% x $10,000) was imposed.
|Date of NOA||Tax Due Date||Tax Payable||5% Late Payment Penalty Imposed|
|1 Jun 2020||1 Jul 2020||$10,000||$500|
If you have filed an objection and are awaiting the outcome, you still must pay the tax assessed as shown in the NOA. Excess payment will be refunded if the assessment is revised.
Example 2: Penalties and refunds when an objection is filed
Trustee Y received an estimated NOA, with a tax payable of $10,000, dated 23 Aug 2020. The due date for payment is 23 Sep 2020 (one month from the date of NOA).
Trustee Y filed an objection and did not pay the tax. As no payment was received by the due date, a 5% late payment penalty of $500 was imposed.
Trustee Y paid the tax and penalty on 12 Oct 2020. On 9 Nov 2020, the Assessment was amended to $1,300 and the late payment penalty was revised to $65 (5% late payment penalty on $1,300) accordingly. A refund of $9,135 was made to Trustee Y.
|Date of NOA||Due Date on NOA||Tax Amount||5% Late Payment Penalty Imposed|
|23 Aug 2020||23 Sep 2020||$10,000||$500|
|9 Nov 2020||23 Sep 2020||($8,700)||($435)|
|Revised Tax and 5% Penalty||$1,300||$65|
If the tax remains unpaid 60 days after the imposition of the 5% late payment penalty, an additional penalty of 1% per month may be imposed for every completed month that the tax remains unpaid, up to a maximum of 12% of the unpaid tax.
Example 3: Penalty imposed for continued late payment
Trustee Z did not pay the tax payable of $10,000 by the due date on the NOA and received a late payment penalty notice dated 2 Jul 2020 informing the Trustee of the overdue tax and the 5% late payment penalty.
The due date for payment of tax and penalty (i.e. $10,500) on the notice was 2 Aug 2020 (one month from the date of the late payment penalty notice).
As the tax was unpaid for 1 completed month after 60 days from the late payment penalty notice due date, a 1% additional penalty was imposed on 2 Oct 2020. 1% penalty will continue to be imposed for each additional month that the tax remained unpaid.
Trustee Z eventually paid the tax and penalties on 15 Nov 2020.
The total penalty imposed was $700 (i.e. 5% penalty x $10,000 plus 1% additional penalty x $10,000 x 2 months).
|Late Payment Penalty Notice Date||Payment Date||5% Penalty Imposed||Additional 1% Penalty Imposed|
|2 Jul 2020||15 Nov 2020||$500
($10,000 x 5%)
($10,000 x 1% x 2 months)
Appealing for waiver of late payment penalty
Appeals must be made via email to [email protected]
Appeals will only be considered if:
You have paid the overdue tax in full, by the due date as stated in the late payment penalty notice; and
No waiver has been granted in the past 2 calendar years or you have paid on time in the past 2 years
Appointment of agents
If the tax remains unpaid, IRAS may appoint agents like the estate’s bank, tenant, lawyer or other 3rd parties with money due to the estate to recover the taxes owing.
When the bank is appointed as the agent, you will experience inconvenience in using the bank accounts (e.g. being unable to access your bank accounts) until you have fully paid the tax.
Requests made for release of the banks from the agent appointment after 12pm on weekdays will only be processed on the next working day while requests cannot be processed on Saturdays, Sundays and Public Holidays.
Agents will be released from the appointment only after the tax and penalties have been paid in full.