Tag Archives: PIC cash payout

Income Tax – Revised e-Tax Guide on Productivity & Innovation Credit


The IRAS has issued the fifth edition of the e-Tax Guide on Productivity and Innovation Credit on 22 November 2016 with a view to incorporating the Budget 2016 changes:

  •  Expiry of the PIC Scheme in YA 2018,
  • Reduction in the PIC cash payout rate from 60% to 40% for qualifying expenditure incurred on or after 1 Aug 2016,
  • Compulsory e-Filing of PIC cash payout applications with effect from 1 Aug 2016.

Other amendments include the following:

  •  Remove information on PIC bonus which expired after YA2015.
  • The evaluation criteria for the case-by-case approval of automation equipment (see Annex A)  Remove paragraph on the clarification of the basic tool criteria c. Enhanced Writing-Down Allowance (“WDA”) and Deduction for Intellectual Property Rights (“IPRs”)
  • Enhancement to allow companies to make an irrevocable election to claim the WDA over a five, ten or fifteen-year period (on a straight line basis) on capital expenditure incurred in acquiring the IPR – with effect from YA 2017.

If you have any questions regarding the above, please contact support@whm-consulting.com.

Income Tax – Business and Management Consultancy Owner Convicted of PIC Fraud


It was reported on IRAS’ website on 15 July 2016 that K H Raja Mohamad Bin Maiden (“K H Raja Mohamad”), the sole proprietor of Qaizar Consultancy, has been convicted of giving false information to the Comptroller of Income Tax in order to obtain a Productivity

K H Raja Mohamad made a PIC cash payout claim for the $99K expenditure that Qaizar Consultancy had purportedly incurred on the purchase of software in the YA 2013, for the qualifying financial period from Oct 2012 to Dec 2012. However, IRAS’ investigations revealed that Qaizar Consultancy was registered with the Accounting and Corporate Regulatory Authority 10 Apr 2013, two days after the false PIC cash payout claim was made.  K H Raja Mohamad had backdated the business commencement date in order to falsely qualify for the PIC cash payout claim. No business or trade had been conducted under Qaizar Consultancy.  It was also found out by IRAS that K H Raja Mohamad had agreed with the software vendor to backdate the software purchase invoice even when the business and expenditures were non-existent during the said qualifying financial period.

To make his claim appear legitimate, K H Raja Mohamad also backdated contributions to the CPF accounts of three individuals, in order to represent them as Qaizar Consultancy’s local employees when in fact they were not.

In the end, K H Raja Mohamad was convicted of the charge that he, without reasonable excuse, gave false information to the Comptroller of Income Tax to obtain the PIC cash payout which he was not entitled to. The court ordered K H Raja Mohamad to pay a penalty of $118K, which is 2X the amount of the PIC cash payout that would have been disbursed to Qaizar Consultancy if the false claim was not detected by IRAS. He was also ordered to pay a $4,500 fine.

What does this mean to you? 

IRAS takes a serious view of any attempt by claimants, vendors or consultants to defraud the Government.  Offenders convicted of PIC abuse will have to pay a penalty of up to 4X the amount of PIC cash payout fraudulently obtained or which would have been obtained if the offence had not been detected, and a fine of up to $10,000 and/or imprisonment of up to five years.

If you have any questions, please contact support @whm-consulting.com.

Income Tax – False PIC Claim by a Singapore Company and its Director


It was reported in IRAS’ website on 31 May 2016 that Parade Industries Pte. Ltd. (“PIPL”) and its director, Lim Beng Gwek, have been convicted of providing false information in the company’s Productivity and Innovation Credit (“PIC”) cash payout application form.

IRAS’ investigation revealed that PIPL,  a manufacturing company that produces plastic packaging products, made a PIC cash payout claim for the purchase of an automatic vacuum forming machine at a cost of $103,000 in the Year of Assessment (“YA”) 2014.  However,  the machine was in fact purchased by PIPL in 1999. Lim had signed PIPL’s PIC cash payout application form which falsely reflected that PIPL had purchased the machine in YA 2014 to claim $60,000 of PIC cash payout on behalf of Parade Industries.

PIPL was convicted of giving false information to the Comptroller of Income Tax, in order to obtain a PIC cash payout which it was not entitled to. The court ordered PIPL to pay a penalty of $180,000,  which is 3X the amount of the PIC cash payout that was wrongfully obtained, and a fine of $10,000.

In addition, Lim was convicted of giving false information without reasonable excuse to the Comptroller to assist PIPL  to obtain a PIC cash payout, which PIPL was not entitled to. The court ordered Lim to pay a penalty of $120,000, which is 2X the amount of PIC cash payout that was wrongfully obtained, and a fine of $4,000.

What does this mean to you? 

IRAS takes a serious view of any attempt by claimants, vendors or consultants to defraud the Government.  Offenders convicted of PIC abuse will have to pay a penalty of up to 4X the amount of PIC cash payout fraudulently obtained or which would have been obtained if the offence had not been detected, and a fine of up to $10,000 and/or imprisonment of up to five years.

If you have any questions, please contact support @whm-consulting.com.

 

Income Tax – PIC Fraud


It was reported on IRAS’ website on 19 February 2016 that One IT Distribution Pte Ltd (OITPL) and its director, Alan Ang Soon Teck (Ang), have been convicted of assisting Chuan Huat Electronics Pte Ltd (CHEPL) to obtain a higher amount of Productivity and Innovation Credit (PIC) cash payout to which CHEPL  was not entitled.  CHEPL was convicted of giving false information in the PIC cash payout application form in order to obtain a PIC cash payout of $16,000.

IRAS’ Investigations revealed that Ang had instructed his staff to prepare a false sales invoice of $27,000 to CHEPL when there was no such sale transaction in the first place. CHEPL is in the business of repairing domestic electrical/electronic appliances.

With wilful intent,  CHEPL stated in its PIC cash payout application form in November 2012 that it had incurred the purchases of PIC automation equipment amounting to $27,000 and thus, it wrongfully obtained a PIC cash payout of $16,000. CHEPL  was convicted of giving false information to the Comptroller of Income Tax to obtain the PIC cash payout. The court ordered CHEPL to pay a penalty of $48,000, 3X of the amount of the PIC cash payout that it had wrongfully obtained, plus a fine of $4,000 under Section 37J of the Income Tax Act (ITA).

OITPL was convicted of wilful intent to assist CHEPL to obtain a PIC cash payout by creating a false invoice. The court ordered the company to pay a penalty of $65,200, 4X the amount of PIC cash payout that CHEPL had wrongfully obtained, and a fine of $4,000 under Section 37J of the ITA.

Ang was also convicted of wilful intent to assist CHEPL to obtain a PIC cash payout  by authorising the preparation of a false invoice. The court sentenced him to 12 days in jail and a penalty of $65,200, which is 4X the amount of PIC cash payout that CHEPL had wrongfully obtained under Section 37J of the ITA. Ang was linked to four 4 other companies – Vital Computer Group Pte Ltd, Cheapskates Pte Ltd, Vital Repair & Parts Pte Ltd and PC Geeks Pte Ltd).  All have also been dealt with separately by IRAS for making false PIC claims. In these four cases, IRAS imposed composition fees amounting to $108,800, which is 2X the amount of false PIC claims.

What does this mean to you?

Under the ITA, offenders convicted of PIC abuse will be imposed a penalty of up to 4X the amount of PIC cash payout fraudulently obtained or which would have been obtained if the offence had not been detected, and a fine of up to $50,000 and/or imprisonment of up to 5 years.  You are reminded that  IRAS takes a serious view of any attempt by claimants, vendors or consultants to defraud the Government.

If you have any questions, please contact us at support@whm-consulting.com

Income Tax – Taxpayer Jailed for Tax Evasion and PIC Fraud


Boss of Social Escort Agency Jailed for Tax Evasion and PIC Fraud

It was reported on IRAS’ website on 11 February 2016 that  Chew Tiong Wei (Chew), a sole-proprietor of a social escort business, was convicted of tax evasion and PIC fraud.

IRAS’ investigations revealed that Chew was first arrested by the Singapore Police Force (SPF) for vice-related offences in December 2014, and then he was found subsequently to have evaded income tax by under-declaring his business income for Years of Assessment (YA) 2012 and 2013.  What happened was that although Chew had kept proper business records, it was found that he had wilful intention to evade tax by making false entries in his income tax returns.  He used fictitious figures to report his income and thus, he had under-declared business income of S$275K for two years.

He was also found guilty for submitting false information with a view to obtaining a PIC cash payout and  PIC bonus when the business did not fulfil the 3-employees requirements.  The three persons named as Chew’s employees were found to be his father, mother and wife who had never worked for him in his business despite the fact that Chew made CPF contributions to their CPF accounts.

Chew was sentenced to  6 months’ jail for tax evasion, and was ordered to pay a total penalty of $80K, which is 3X the amount of tax evaded.  He was also ordered to pay a penalty of $$72K, 3X the PIC cash payout of $24,000 that he had wrongfully obtained, and sentenced to 6 months’ jail.

What does this mean to you?

Under the Income Tax Act, offenders convicted of PIC fraud will have to pay a penalty of up to 4X the amount of cash payout fraudulently obtained, and a fine of up to $50,000 and/or imprisonment of up to five years.  On the other hand, penalties for tax evasion can be up to 4X the amount of tax evaded and in certain situations, imprisonment may also be imposed.

If you have any questions, please contact us at support@whm-consulting.com