Company director penalised more than $30,000 for not filing income tax returns

Corbell Technology Pte Ltd (“Corbell”), a computer hardware company, and its director have been convicted for tax offences.

Corbell evaded income taxes by submitting a false capital allowance claim in its tax return for Year of Assessment (YA) 2014. The company was sentenced to a fine of $2000 and a penalty of $24,023, which is two times the amount of taxes undercharged.

In the same Court, a director of Corbell, Tan Kee Hau (“Tan”), faced a total of five charges for failing to file his income tax returns for two years or more for YAs 2008 to 2012, as well as two charges for filing incorrect income tax returns for YAs 2013 and 2014.

• Proceeded Charges for Tan

Tan pleaded guilty to two charges of failure to file his income tax returns for two years or more for YAs 2010 and 2011, as well as one charge of filing incorrect returns by omitting to declare his agent commission income for YA 2013, with the four other charges being taken into consideration for the purposes of sentencing.

For the two charges of failure to file his income tax returns, Tan was fined $600 and ordered to pay a penalty of $30,745, which is two times the amount of income tax evaded.

For the charge for filing an incorrect return for YA 2013, Tan was fined $2000 and ordered to pay a penalty of $23,262, which is two times the amount of income tax undercharged.

In total, he was fined $2600 and ordered to pay penalties amounting to $54,008. In addition, he was required to pay $57,131 in back taxes.

Facts of the Case

Investigations revealed 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.

The tax return was submitted in June 2014 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. This resulted in $12,011 in taxes undercharged.

Investigations also revealed that Corbell claimed agent commission expenditure, part of which was paid to Tan. However, Tan did not report the commission income.   

Tan failed to file his income tax returns for YAs 2010 to 2012, resulting in income amounting to $373,965 not being taxed. For YA 2013 and YA 2014, 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 YA 2013 and YA 2014 totalled $119,585 and $71,246, which led to $11,631 and $7,966 in taxes undercharged for YA 2013 and YA 2014 respectively.

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. 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.

Failure to furnish a return of income

Anyone who continually fails without reasonable excuse to file their outstanding tax returns despite reminders from IRAS may face prosecution action under section 94A(3) of the Income Tax Act. The penalty for failure to file income tax returns for any YA for more than two years is double the tax amount and a fine of up to $1,000.

Lower Penalties for Prompt and Full Voluntary Disclosure
IRAS imposes lower penalties for taxpayers who promptly come forward with full disclosure of the mistakes they uncovered from self-reviews. Taxpayers who wish to disclose errors made in their past income tax returns should write to IRAS.

Reporting of Malpractices

Businesses or individuals are encouraged to immediately disclose any past mistakes. IRAS will treat such disclosures as mitigating factors when considering action to be taken. Those who wish to disclose past mistakes or wish to 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 Informant

A reward based on 15% of the tax recovered, capped at $100,000, will 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