A director for Singapore IT distributor Corbell Technology has been convicted of tax offences and penalised more than $30,000 for not filing income tax returns.
Tan Kee Hau who acted as a director for Corbell faced a total of five charges for failing to file his income tax returns for two years or more for assessment years 2008 to 2012, as well as two charges for filing incorrect income tax returns for assessment years 2013 and 2014.
Furthermore, the distributor was sentenced to a fine of $2,000 and a penalty of $24,023, which is twice the amount of taxes undercharged for submitting a false capital allowance claim in its tax return for year of assessment 2014.
Founded in 1997, Corbell specialises in the distribution of IT products, specifically computer components.
During his trial, Tan pleaded guilty to two charges of failure to file his income tax returns for two years or more for assessment years 2010 and 2011, as well as one charge of filing incorrect returns by omitting to declare his agent commission income for year of assessment 2013, with the four other charges being taken into consideration for the purposes of sentencing.
Tan was fined $600 and ordered to pay a penalty of $30,745 for the two charges of failure to file his income tax returns which is twice the amount of income tax evaded.
However, penalties for tax evasion can be up to four times the amount of tax evaded and in certain situations, jail terms may also be imposed.
Furthermore, for the charge of filing an incorrect return for year of assessment 2013, Tan was fined $2,000 and ordered to pay a penalty of $23,262, which is double the amount of income tax undercharged.
In total, he was fined $2,600 and ordered to pay penalties amounting to $54,008. In addition, he was required to pay $57,131 in back taxes.
What the investigation revealed is that Corbell incorrectly claimed in its tax return that the company had incurred capital expenditure for a customer relationship management (CRM) software valued at $31,800 when no such expenditure had been incurred.
In June 2014, a tax return was submitted to claim a capital allowance of $31,800 for the purported purchase of the CRM software, as well as an additional capital allowance of $95,400 under the Productivity and Innovation Credit (PIC) scheme, which was three times the value of the CRM software.
As a result, $12,011 in taxes were undercharged.
Furthermore, an investigation has revealed that Corbell claimed agent commission expenditure, part of which was paid to Tan. However, Tan did not report the commission income.
In addition to this, Tan failed to file his income tax returns for assessment years 2010 to 2012, resulting in income amounting to $373,965 not being taxed.
For year of assessment 2013 and year of assessment 2014, it was found that Tan only reported his employment income that was submitted via the auto-inclusion scheme and did not declare the commission income he received from Corbell.
In fact, the commission income earned by Tan from Corbell in year of assessment 2013 and year of assessment 2014 totalled $119,585 and $71,246, which led to $11,631 and $7,966 in taxes undercharged for year of assessment 2013 and year of assessment 2014, respectively.
Singapore has strict laws against tax evasion with those who fail to file their outstanding tax returns without reasonable excuse to the inland revenue authority of Singapore facing possible prosecution action under section 94A(3) of the Income Tax Act.
The penalty for failure to file income tax returns for any year of assessment for more than two years is double the tax amount and a fine of up to $1,000.
However, lower penalties are possible for taxpayers who promptly come forward with full disclosure of the mistakes they uncovered from self-reviews.
"IRAS [Inland Revenue Authority of Singapore] takes a serious view of non-compliance and tax evasion," an accompanying statement read. "There will be severe penalties for those who wilfully evade tax.
"Taxpayers are responsible for the information declared in their income tax returns. 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."