SINGAPORE: Two company directors received jail terms and total penalties of more than S$1 million for claiming private expenses in company tax returns, the Inland Revenue Authority of Singapore (IRAS) said on Friday (Jul 12).
For the offences, Foo Ming Chee was given a month's jail and a S$440,309 penalty - three times the amount of income tax evaded. His wife Lim Kim Wah received six months' jail and a S$587,079 penalty, which is four times the amount of income tax evaded.
They are both directors of Candid Electric, an electric goods dealer in the marine industry.
The company was found to have understated its income by incorrectly claiming the couple’s private expenses in its tax returns from the years of assessment 2006 to 2010.
“These private expenses included luxury goods purchases such as handbags and jewellery, as well as family holidays,” IRAS said.
Foo and Lim faced five charges each for assisting Candid Electric in evading taxes. Foo had made false entries in Candid Electric’s income tax returns, “claiming fictitious expenses amounting to S$929,460”, IRAS said.
Lim, meanwhile, prepared false invoices and payment vouchers to support these claims.
This resulted in S$175,545 in tax undercharged, the authority added.
The couple pleaded guilty to two charges each, and the other charges were taken into account for sentencing.
In addition, Candid Electric was fined S$4,000 and given a penalty of S$36,411 for making incorrect returns without reasonable excuse.
“For income tax purposes, business expenses claims should not include fictitious expenses or expenses that are private in nature such as private entertainment and luxury goods expenses,” IRAS said.
It also warned that it takes non-compliance and tax evasion seriously. Offenders may face a penalty of up to four times the amount of tax evaded, as well as imprisonment.