Lim Yan Ling (“Lim”), a 53-year-old online business owner, has been ordered by the Court to pay fines and penalties totalling $54,238, after being convicted of offences involving incorrect income tax returns and the failure to register for Goods and Services Tax (GST).

Lim operated an online business, Synthesis Marketing (“Synthesis”), selling household electronic goods over various platforms including Lazada and Shopee.

Investigations revealed that the sales figures for Synthesis had exceeded $1 million for four consecutive quarters ending 31 March 2017. However, Lim did not register her business for GST by 30 April 2017. This resulted in a total of $30,103 in net GST not paid to IRAS. For one count of failing to register for GST, the Court ordered Lim to pay $7,010 in fines and penalties.

Furthermore, Lim was the actual owner and beneficiary of Synthesis, but had arranged for other individuals to be the registered sole-proprietor at different time periods and did not report the trade income earned from Synthesis in her income tax returns.

For the Year of Assessment 2020, Lim had omitted a total of $210,441 in trade income earned from Synthesis in her income tax return, which resulted in $21,614 in taxes undercharged. For one count of omitting her trade income in her income tax return, the Court ordered Lim to pay $47,228 in fines and penalties. 

GST Registration

All businesses, including individuals deriving income from their trade, profession or vocation, should closely monitor their income on a calendar year basis ¹ to assess if they need to register for GST. If their 12-month taxable turnover has exceeded $1 million at the end of the calendar year, they will be required to apply for GST registration within 30 days. Additionally, if at any point in time, they can reasonably expect their taxable turnover to be more than $1 million in the next 12 months, they must register for GST within 30 days from the date of their forecast. They will be registered on the 31st day from the forecast date. 

Any business that fails to register for GST is still required to pay GST on all their past transactions from the date the business became liable for GST registration. GST is payable even if the amount was not collected from customers. In addition, failure to register for GST is an offence and businesses may be required to pay a penalty equal to 10% of GST due and a fine up to $10,000.

IRAS’ Compliance Focus

IRAS continues to focus its compliance efforts on self-employed (i.e., persons carrying on a trade, business, profession, or vocation), as they tend to commit more mistakes and file incorrect income tax returns. Using data analytics and advanced statistical tools, IRAS is able to cross-check data and detect anomalies.

All businesses including self-employed persons should ensure that they report their business income and expenses accurately in their Income Tax Returns. This includes gig workers such as online sellers, live commerce sellers and social media influencers selling, promoting or advertising products on online platforms or social media platforms on their own account or on behalf of third parties. Income earned (including non-cash items such as products/services received) from gig work is taxable even if it was carried out on a part-time/casual basis. Business expense claims should not include personal and capital expenses as they are not tax-deductible (e.g., private entertainment expenses not related to the running of the business and all expenses in respect of private vehicles).

Making Incorrect Tax Return or Giving Incorrect Information in GST Registration Form

Any person who without reasonable excuse or through negligence, makes an incorrect return or gives any incorrect information in relation to any matter affecting his own liability to tax, or the liability of any other person or of a partnership, will be liable to a penalty that is twice the amount of tax undercharged. A fine and/or a jail term may also be imposed. IRAS takes a serious view of non-compliance and tax evasion. There will be severe penalties for those who wilfully evade tax. The authorities will not hesitate to bring offenders to court. Offenders may face imprisonment for up to seven years and penalties of up to four times the amount of tax evaded.

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 actions to be taken. Please refer to the IRAS website for more information on how to disclose past mistakes. Those who wish to report malpractices may make their submissions via this form.

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 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