Income Tax – Sole-proprietor to pay penalty for omission of income


It was reported on the IRAS’ website on 17 September that Tan Siew Hoon Pauline, the sole-proprietor of Staffing Network which provides recruitment services, pleaded guilty on 30 July 2018 to 5 charges of understating her income without reasonable excuse for Years of Assessment (YAs) 2009 to 2013.

IRAS’ Investigations revealed that Tan had only declared $444,633 in her income tax returns for YAs 2009 to 2013 when the net income earned was $1,748,058.  Further, Tan did not notify the Comptroller of GST when the taxable turnover of Staffing Network had exceeded $1m in Year 2009.

Tan was the sole signatory of Staffing Network’s bank account and she personally managed and prepared the accounts of Staffing Network. She tracked the revenue payments from her customers, made payments for Staffing Network’s operating expenses and banked in customers’ cheques into Staffing Network’s bank account.

The court sentenced Tan to pay a penalty of $344,522, which is 2X the tax undercharged of $172,261, and a fine of $17,500.  One other charge of failing to notify the Comptroller of Goods and Services Tax of her liability to be registered for GST was taken into consideration for sentencing.

What does this mean to you?

IRAS takes a serious view of non-compliance and tax evasion. There will be severe penalties for those who either give incorrect returns or wilfully evade tax. Penalties for tax evasion can be up to four times the amount of tax evaded. Jail terms may also be imposed.

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