Earlier in the week, on 26 August 2024, a CNA article carried a story with a strange headline: Food delivery rider wins damages over car accident, but hearing reveals he did not declare income or pay tax.
Despite winning the case, the headline carried an information seemingly unrelated to the accident – that he did not pay any income tax. The reasons that the food delivery rider had given in court was that “I have never paid income tax. I do not report because I do not have any CPF (Central Provident Fund)”.
As most self-employed persons in Singapore will know, you must file in your income tax if your net profit is $6,000 or more in the preceding year. Not doing so can be considered tax evasion.
Even though the food delivery rider was in the right and won the court case, he has potentially created problems for himself with IRAS and other government bodies.
Here’s how submitting your income tax as a self-employed person can protect yourself in the future.
Read Also: Guide To Understanding Your Tax Obligations As A Self-Employed Individual
#1 Claiming For Compensation, Especially In A Traffic Accident
Food delivery riders, and private hire car (PHC) drivers, are two groups of self-employed persons that likely have greater chance of getting into a traffic accident – obviously, because they do their work on the roads.
Taking the example of the CNA news report, the food delivery rider was a 60-year-old man who was thrown off his motorcycle after a car collision. Having injured his right shoulder and hands, he had to seek medical attention.
He wanted to claim compensation for his lost income while unable to work due to his injury. However, the fact that he had not submitted his tax returns meant that it became a complicated process – that likely led to the case going to court in the first place.
During the court case, his income were backed by weekly earning statements with Grab. It also seemed like he only received compensation for lost income, and there was no mention of costs that he had to continue paying for, which may have included ongoing payments for his motorcycle.
Read Also: Private-Hire Car Drivers; Taxi Drivers; Delivery Workers: How Much Did Platform Workers Earn In 2023
#2 Unable To Take The Time To Recuperate Properly
Again, referring to the CNA article, the food delivery rider was given a total of 59 days’ medical leave. However, since he could not receive compensation smoothly – which may or may not have been because of not having his tax returns as proof – he hurried back to work after resting for only 20 days.
This may not have been good for his health, but he did not have the luxury to wait for the compensation to come in.
Read Also: Complete Guide To CPF Contribution For Platform Workers
#3 Potential Problems With The Law – IRAS; CPF; Others?
The food delivery rider was 60-years-old, and claimed that he had “never reported (his income) before”. Depending on how many years he had avoided paying taxes, this may amount to a significant amount when the authorities finally catch up. There may also be hefty penalties.
The food delivery rider had a reported income of more than $61,500 in 2022. On top of having to pay income tax – which may have amounted to $2,200 a year – self-employed persons also have to make mandatory CPF MediSave Contributions – which may have amounted to roughly $6,000.
Finally, by not submitting his income tax, he may have also become eligible for government schemes that he did not qualify for. This could put him in more hot water with other regulatory bodies.
Read Also: How Much Self-Employed Persons Need To Contribute To MediSave (And What Happens If You Don’t)
#4 Qualify For Support In Years That You May Have Needed It
By not submitting his income tax, the food delivery rider may not be eligible for support when he potentially will require it the most.
One example was during the COVID-19 pandemic in 2020, when the government provided strong support for workers and self-employed persons. Some self-employed persons may have found themselves ineligible for the support – potentially during some of their toughest times – as a result of not submitting their taxes correctly or at all.
While food delivery riders may not have been hard-hit during the pandemic, and may have likely saw more delivery demand during those months, it shows a potential problem arising from not making proper tax submissions.
Read Also: Guide On How To File Your Income Tax As A Private Hire Car (PHC) Driver Or Taxi Driver In Singapore
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