Mdm Chua Guat (蔡月), former managing partner of a business in wholesale trade of general hardware, pleaded guilty to two charges of making false entries in her individual income tax returns for the Years of Assessment (YA) 2005 and 2006. She was sentenced to ten days imprisonment per charge, which she will serve concurrently, and ordered to pay back taxes and penalties of $236,420.12. In default of paying the penalty of $177,315.09, which is three times the amount of income tax evaded, Chua Guat would have to serve an additional six months of jail term.

Chua Guat also committed other income tax and GST offences which were compounded by IRAS. As a result, she had to pay $110,745.17 in back taxes and $437,098.89 in penalties for these tax offences.

Deliberate Scheme to Evade Tax

Information provided by an anonymous informant helped IRAS in uncovering this case. IRAS’ investigations revealed that Chua Guat under-reported her income in her YA2005 and YA2006 individual income tax returns by $161,030 and $160,650 respectively. At the time of offence, Chua Guat, as the principal partner of Chuan Kok Trading Co (“CKTC”), was responsible for the financial matters of the business, including the maintenance of accounts and submission of the partnership’s income tax returns.

For both Years of Assessment, Chua Guat had engaged an accounting firm to prepare CKTC’s statement of accounts and income tax returns. Although Chua Guat had full knowledge of the business activities and kept detailed records of the Partnership’s sales in CKTC’s “2004 and 2005 Sales Books”, she deliberately omitted some of the sales when passing CKTC’s accounts to the accounting firm for their preparation of CKTC’s statement of accounts and income tax returns.

By failing to declare CKTC's sales in full and declaring only partial amounts in the partnership’s statement of accounts and tax returns to IRAS, CKTC’s income was understated by $483,091 and $481,950 in YA 2005 and YA 2006 respectively. This in turn reduced Chua Guat’s share of divisible profit from the partnership and she wilfully declared only these lower amounts of income in her individual income tax returns.

Tax Offences by Other Partners of CKTC

Chua Guat’s other two partners, while not involved in the operations and preparations of accounts for CKTC, also under-reported their share of partnership income in their individual income tax returns. Their offences were compounded by IRAS and they had to pay a total of $253,298.97 in back taxes and $257,160.61 in penalties.

Other Income Tax Offences Committed by Chua Guat

During the investigation, IRAS also uncovered other income tax offences committed by CKTC. Chua Guat inflated business expenses in the accounts of CKTC so as to claim more tax deductions than CKTC was entitled to. This also resulted in Chua Guat under-reporting her share of partnership income by another $278,087 and she had to pay $220,776.90 in additional taxes and penalties.

GST Offences by Chua Guat

As a GST-registered business, CKTC was required to file GST returns but due to Chua Guat’s omission of CKTC’s sales, she consequently failed to report the GST output tax for the omitted sales of CKTC. For this offence, Chua Guat had to pay $327,067.16 in penal tax and the GST that has not been accounted for.

For all the tax offences that Chua Guat has committed, she had to pay a total of $784,264.18 in taxes and penalties.

IRAS Takes a Serious View of Tax Evaders

IRAS takes a serious view of taxpayers who do not comply with the need to submit proper income tax returns or have a wilful intent to evade tax. Taxpayers are also 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.

Cash Rewards for Informants

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 otherwise be lost. All payments are at the discretion of the Comptroller. IRAS will ensure that the identities of informants are kept strictly secret and confidential. Anyone who wishes to report suspected malpractices amounting to tax evasion can email [email protected] or write to IRAS at the address below:

Inland Revenue Authority of Singapore
Investigation & Forensics Division
55 Newton Road, Revenue House
Singapore 307987