Business Under-Declared more than $325,000 in Sales

Ha Wai Kay ("Ha"), 64, the sole-proprietor of Kay Lee Roast Meat Joint (琪利珠江烧腊), has been convicted of evading income taxes amounting to $54,917.15 for Years of Assessment ("YA") 2010 and 2011. Kong Kuee Chin ("Kong"), 69, Ha’s wife, was also convicted of assisting Ha to evade taxes.

Husband and Wife Provided False Information to Their Accountant for Submission

Ha was the sole-proprietor of Kay Lee Roast Meat Joint ("Kay Lee"), and Kong, Ha’s wife, was the sole-proprietor of Wan Tat Eating House ("Wan Tat"). Kong, who was in charge of recording the sales amounts, would manually record the daily cash collections and expenditures for both Kay Lee and Wan Tat into her diary, and provide a total monthly sales income for both businesses in one lump sum, on slips of paper, to their accountant who assisted in the preparation of their statement of accounts and their income tax returns.

For YA2010 and YA2011 (calendar years 2009 and 2010 respectively), Kong would provide their accountant with Wan Tat’s estimated monthly sales, from which their accountant would deduct from the lump sum figure to derive Kay Lee’s annual sales income figure for the relevant YA. Their accountant would then explain the figures to be submitted to Ha and Kong, and upon Ha’s agreement, submit the income tax returns to IRAS.

IRAS’ Investigations

Investigations revealed that for YA2010, Kong had knowingly provided Kay Lee’s total sales income as $531,924 to their accountant, when the actual sales income was $693,839. Similarly, for YA2011, Kong had knowingly provided Kay Lee’s total sales income as $665,413 when the actual sales income was $829,335. Ha had under-declared his income by $161,915 in YA2010 and $163,922 in YA2011 and was undercharged for income tax by a total of $54,917.15 for the 2 years of assessment ($26,017.78 for YA2010 and $28,899.37 for YA2011).

In knowingly providing false sales income figures to the accountant, Kong intentionally assisted Ha to evade taxes. Ha, in approving Kay Lee’ erroneous accounts and his income tax returns before their submission, when he was aware that Kong had provided false sales income figures, made false statements in his income tax returns as he had declared that Kay Lee’s sales income figures for YA2010 and YA2011 were true, correct and complete.

Taxpayers are required to declare that the information in his/her income and claim for deductions and reliefs given in income tax returns are true, correct and complete; and they are ultimately responsible for the information declared in their income tax returns.

Court Sentences

Ha was found guilty and convicted of wilful intent to evade taxes amounting to $54,917.15, making false statements by approving submission of his income tax returns for YA2010 and YA2011 that under-declared his income earned from Kay Lee. The Court sentenced Ha to 4 weeks’ jail and ordered him to pay a penalty of $164,751.45, three times the amount of tax evaded. Kong was also found guilty and convicted of assisting Ha to evade taxes. The Court also sentenced Kong to 4 weeks’ jail and ordered her to pay a penalty of $164,751.45, three times the amount of tax evaded, for assisting in tax evasion. The total amount of penalty ordered for both Ha and Kong is $329,502.90.

Two further charges of income tax evasion were taken into consideration for Ha and Kong respectively. Ha and Kong have pleaded guilty and made full payment of the income tax evaded.

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 ultimately 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.

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, reveal evaded taxes, or report malpractices that might indicate tax evasion, 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, 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 would ensure that the identities of informants are kept strictly confidential.