In case you didn’t already know, we have to pay income tax in Singapore. Between April to September every year, majority of us receive our income tax bills – affirming the amount we have to pay in taxes for the year (for our income earned in 2017). Typically, we will be sent a mail and we will also be notified via text message on our phones.
We can also choose to contest the bill by logging on to the myTax Portal and clicking on the “Object to Assessment” option within 30 days from the date of the tax bill.
Read Also: 4 Ways To Reduce Your Income Tax
Some People Don’t Have To File In Their Taxes
Those who do not receive their tax bills very likely never filed their taxes in the first place. There are three main groups of people who would not have filed their taxes:
1) Those who generally earned less than $22,000 a year in 2017
2) Those working for employers who participate in the Auto-Inclusion Scheme (AIS)
Do note that even if your employer is participating in the AIS, you have to file in taxes for any income earned outside of your employment, such as rental income or part-time work with another employer.
You also have to file in your income if you receive instructions to do so from the Inland Revenue Authority of Singapore (IRAS). This is regardless of whether your employer is participating in the AIS or if you earned less than $22,000 in 2017.
3) Those who ignored their taxes
For those who either conveniently forgot about taxes or decided not to file them by the deadline, there are repercussions.
When Do We Have To File In Our Taxes?
In Singapore, we have to file in our taxes by 15 April 2018 (for paper filing) and 18 April 2018 (for e-filing).
What Happens If We Miss This Deadline?
Firstly, if we know that we are going to miss this deadline, we should apply for an extension to file in our taxes via email. We should include our full name, tax reference number, reason(s) for our extension request and give them an estimate of our chargeable income.
If we just ignore filing our taxes completely, IRAS may 1) impose a late filing fee not exceeding $1,000; 2) issue an estimated Notice of Assessment (NOA); and 3) summon us to Court.
For majority of cases, IRAS tends to impose a late filing fee instead of taking prosecution actions. Depending on our past filing and payment records, we will be charged a late filing fee between $150 and $1,000. A letter will be sent notifying us of this late filing fee and filing extension. Failure to do so will end up with us getting summoned to Court.
Receiving A Notice Of Assessment (NOA)
IRAS may also send an estimated NOA to individuals who have failed to file their income tax return. This will likely be based on our past years’ income or other information available to IRAS.
Once we receive the estimated NOA, we must pay the estimated tax within one month from the date of the NOA and file our taxes immediately. Any excess tax we paid will be refunded and any shortage will have to be topped-up.
This is where we may be hit with a second penalty – late payment or non-payment of taxes fee – in addition to the late filing fee, if we fail to pay our taxes within the one-month deadline. We will be notified via mail of this fee – a 5% penalty and subsequently an additional 1% penalty may be imposed for every month (up to a maximum of 12% of the tax outstanding).
Appealing Against Late Filing And Late Payment Fees
Late filing fees and our outstanding taxes must be paid to settle the case with IRAS. Even if late filing fees is paid, prosecution actions may still be taken if our tax return remains outstanding.
We can also choose to appeal our late filing fees via the myTax Portal. On the IRAS website, it states that only consider appeals from those who have submitted the outstanding returns and/or documents by the due date stated in the late filing penalty notification; and who have filed on time for the past two years.
Further Enforcement Actions
To recover outstanding taxes, IRAS may seek out our banks, employers, tenants or lawyers to pay up. They will also issue a Travel Restriction Order (TRO) to stop us from leaving the country, and of course, take further legal actions.
We doubt many people in Singapore would want to “play with” the IRAS or our legal system, and there are, of course, further repercussions if we choose not to file our taxes after being summoned to Court.
Once summoned to Court, we can still file our taxes and pay the fines and necessary amounts at least one week before the Court date to avoid having to go.
In Court, we have to take a plea after the charges are read, and upon conviction, we may face a fine of up to $1,000. If we fail to attend Court, further legal actions may be taken, including a warrant of arrest being issued.
If we fail to pay our income tax for two or more years, we will be ordered to pay a penalty that is twice the tax amount we owe the IRAS for that year as well as a fine of up to $1,000. Failure to do so will result in imprisonment of up to six months.
Paying Taxes In Singapore
As you can tell, the consequences for failing to file or pay taxes in Singapore can stack up. There are fees and interest charges, as well as the prosecution in stored for those wishing to test the system.
If we have major financial troubles paying for our taxes, rather than trying to avoid the IRAS, we should seek them out earlier rather than later to come up with a payment plan we are comfortable with.
As it stands, we can already choose to pay our taxes on monthly instalments via giro, to smoothen the impact of taxes on our monthly cash flow.
There really isn’t a good reason to “run away” from taxes as the IRAS has access to our banks, properties and other monies and investments in Singapore anyway. Doing so will only lead to larger cash outlay in the form of fees and interest charges and impact our personal lives due to travel limitations, prosecution or even jail time.
At the end of the day, we should also understand that our taxes go to running the cohesive and first-world Singapore we call home. You can watch some of the things our taxes pay for in Singapore.
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