As an insurance introducer, Chew was responsible for introducing potential customers to insurance agents for insurance investment policies. Investigations revealed that Chew had assisted three insurance agents – Yvonne Quah, Lim Zhan Yi, and Sherlin Chia Hee Ping – to prepare and file their Personal Income Tax returns. Chew was assisted by another individual, You Yiying (“Kyra”).

Chew, without reasonable excuse, gave incorrect information in the personal tax returns of these three insurance agents to claim false expenses under the guise of “general expenses” and “commission paid to introducers”. The total amount of false expenses amounted to $542,091, which resulted in $93,408 in taxes undercharged.

Investigations revealed that Chew prepared and filed the three agents’ Income Tax returns using the false expense figures which the agents had provided to him, through Kyra, with the intention of reducing their chargeable income and evading tax. To substantiate the agents’ false expense claims, Chew created sham “introducer acknowledgement forms”, which claimed that various individuals had received substantial amounts of “introducer fees” from the agents. Chew proactively recruited individuals who were willing to sign the sham “introducer acknowledgement forms” and provide their NRICs in exchange for token sums of between $50 and $200.

Kyra was sentenced in June 2022 for her role in the scheme, and the three insurance agents involved were convicted of falsifying expense claims in their Income Tax returns in September 2022.

IRAS Warns Against Tax Evasion

IRAS takes a serious view of non-compliance and tax evasion. There will be severe penalties for those who wilfully evade tax. The authority will not hesitate to bring offenders to court. Offenders may face a penalty of up to four times the amount of tax evaded. Jail terms may also be imposed.

Source: IRAS

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The Court imposed the following sentences on Lee for the offences committed between 2014 and 2017:

• For 31 counts of making false entries in the GST returns of three companies – Everasia T&W, Hup Heng and Sante – resulting in $2.97 million of taxes undercharged, Lee was sentenced to between 16 and 20 months’ imprisonment for each offence and a total penalty of $8.91 million which is three times the amount of tax undercharged in these 31 charges;
• For one count of abetting Nourriture in making incorrect GST returns without reasonable excuse resulting in $58,456 of taxes undercharged, Lee was ordered to pay a fine of $5,000 and a penalty of $116,912 which is twice the amount of tax undercharged;
• For one count of submitting a false PIC claim to obtain a payout of $60,000, Lee was sentenced to 8 weeks’ imprisonment and a penalty of $240,000 which is four times the amount of PIC cash payout fraudulently claimed;
• For four counts of money laundering activities involving using illegally obtained GST refunds and PIC cash payouts for various business purposes, including legal expenses and supplier payments totalling $1,652,030, Lee was sentenced to between 10 months’ imprisonment and 27 months’ imprisonment for each offence;
• For three counts of money laundering activities involving transferring illegally obtained GST refunds to multiple persons and entities for various business purposes, including employees’ salary and rental payments totalling $2,091,482, Lee was sentenced to between 9 months’ imprisonment and 43 months’ imprisonment for each offence; and
• For one count of directly taking part in the management of Hup Heng, whilst an undischarged bankrupt and without the leave of the Court or the written permission of the Official Assignee, Lee was sentenced to 3 months’ imprisonment.

Related matters

Lee, who was adjudged a bankrupt in April 2016 and could no longer be registered as a director of his companies without the leave of the Court or the written permission of the Official Assignee, had requested 42-year-old Andy Siew Hui Hock (“Siew”) to be a director of the companies in name. After being appointed as director, Siew was entirely uninvolved in the business and operations of the companies and did not take any steps to find out about their ongoing business activities.

Siew was convicted on 27 January 2022 of two counts of an offence punishable under Section 157(3)(b) of the Companies Act for failing to exercise reasonable diligence in the discharge of his duties as a director of Hup Heng and Sante. Another three counts of the same offence were taken into consideration for the purpose of sentencing. Siew was sentenced to a fine of $5,000 (in default 10 days’ imprisonment) for each offence and disqualified from acting as a director or taking part, whether directly or indirectly, in the management of a company for a period of three years.

Penalties for Non-Compliance

Fraudulent GST Claims

It is a serious offence to wilfully evade tax by submitting false GST returns, such as by understating any output tax, overstating any input tax, excluding taxable supplies or including fictitious transactions. Upon conviction, offenders are liable to pay a penalty of three times the amount of tax undercharged and are liable to be punished with a fine not exceeding $10,000, and/or to imprisonment of up to seven years.

With the enhanced sentencing framework for GST evasion, offenders will face a stiffer imprisonment sentence which takes into account the harm caused by the offender and his or her culpability, such as the quantum of tax evaded, the degree of planning and premeditation and sustained period of offending. The imprisonment term imposed for GST evasion under Section 62 of the GST Act may span the full range of up to seven years.

Money Laundering

It is an offence under the Corruption, Drug Trafficking and Other Serious Crimes (Confiscation of Benefits) Act for any person to acquire, possess, use, conceal or transfer benefits derived from criminal conduct. Upon conviction, offenders are liable to be punished with a fine not exceeding $500,000, or an imprisonment term not exceeding 10 years, or both.

Singapore takes a serious view on fraudulent GST refund claims and related money laundering activities and will not hesitate to take stern enforcement actions against any individuals who commit these offences and persons who facilitate them.

Managing a Company whilst an Undischarged Bankrupt

It is an offence under Section 148(1) of the Companies Act for any person, being an undischarged bankrupt (whether he was adjudged bankrupt by a Singapore Court or a foreign court having jurisdiction in bankruptcy), to directly or indirectly take part in or be concerned in the management of a company without the leave of the Court or the written permission of the Official Assignee. Upon conviction, offenders are liable to be punished with a fine not exceeding $10,000, or an imprisonment term not exceeding two years, or both.

Failing to Exercise Reasonable Diligence in the Discharge of their Duties as a Director

Any person who commits a breach of Section 157(1) of the Companies Act shall be guilty of an offence punishable under Section 157(3)(b) of the same Act and shall be liable on conviction to a fine not exceeding SGD 5,000 or to imprisonment for a term not exceeding 12 months.

The Police takes a serious view of the offence and will not relent in taking offenders to task. Individuals should not be a director of a company when they have limited or no oversight or control, as the company may be used for illegal purposes, such as the laundering of criminal proceeds. Company directors who fail to exercise reasonable diligence in the discharge of their duties run the risk of allowing their companies to facilitate the retention of benefits derived from criminal conduct.

Source: IRAS

The post Former Director Sentenced for Tax Evasion, Money Laundering Offences appeared first on Timcole Accounting.

Increased Penalties for Late Filers

Non-Compliant Employers to Be Prosecuted

In the Tax Season last year, 9 in 10 qualifying employers on AIS had filed by the deadline of 1 March in 2022. Employers who failed to do so were subjected to penalties and/or prosecution. The penalties have been enhanced this year, with a maximum fine of $5,000, up from $1,000 previously. Key personnel of non-compliant businesses such as company directors or partners may also be subject to a fine of up to $10,000, and/or imprisonment for a term of up to 12 months.

Up to $5,000 Penalty for Individuals Who Do Not File Tax Returns by 18 April 2023

Most taxpayers file their taxes by 18 April — 19 in 20 taxpayers did so in 2022. Those who do not file on time are liable to a fine of up to $5,000.

Taxpayers are encouraged to file online from 1 March 2023 and avoid last-minute filing. IRAS will be sending taxpayers filing notifications (via SMS or letters) in late February/early March 2023. Those who do not receive these notifications may check their filing requirements via the filing checker on the IRAS website. Alternatively, they can log into myTax Portal to see if tax returns have been issued to them.

Update Your Contact Details to Be Notified When Your Tax Bill Is Ready

Most taxpayers will receive digital tax bills via myTax Portal this year. Taxpayers should ensure that their contact details and notification preferences in myTax Portal are up to date so that they can receive timely notifications when their tax bills are ready for viewing.

Source: IRAS

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