18 March 2010

Don't forget to Pay your Tax ... early :)

Don't want to delay it? commit to yourself to do it by today! 

here is a article taken from Strait Times... to give us an idea what will happen if we don't pay our tax 

Tax headache for the dilly-dalliers
By Lorna Tan

There is nothing as certain as death and taxes, so the saying goes.

Together with more than 1 million taxpayers here, I'm reminded of this around this time of the year. The deadline for submitting a paper tax form is April 15 and if you e-file, it's three days later.

For those who have to pay income tax - that is, if their annual income is $22,000 or above - it is an annual mundane exercise. Suffice it to say, most of us do not look forward to it.

The Inland Revenue Authority of Singapore (Iras) has, to its credit, tried to make the exercise as painless as possible. It has introduced e-filing and encouraged more companies to participate in the Auto-Inclusion scheme so that their employees need not have to report their income details in their tax filing. In addition, it has initiated a 'no-filing' service scheme which will benefit 653,000 taxpayers this year.

Another initiative was to encourage taxpayers to step forward and voluntarily disclose any past errors in their tax returns. Doing so will attract lower penalties.

Iras categorises taxpayers into four groups:

    * Voluntarily compliant: These are the ones who will comply voluntarily with their tax obligations.

    * Unaware: There are some taxpayers who want to comply but may require some assistance in doing so.

    * Negligent: Some may not have given sufficient attention to their tax obligations
    * Errant: This refers to a minority of errant taxpayers who deliberately cheat or evade tax.

When I look back on my initial past experiences with the tax collector, I realise I fell into the second category.

As a new taxpayer, I was too complacent and didn't take the filing of income tax as seriously as I should have. That was in 1989 and I had just left my first employer, the Ministry of Defence (Mindef), where I had worked as a manpower specialist officer for almost two years.

I knew I had to file my tax returns by mid-April, but somehow I didn't receive my income details from Mindef. As the incident happened so long ago, the details have become hazy. Perhaps the correspondence from Mindef was lost in the mail or it was sent to my previous address as I had moved. But I remember telling myself that I need not file my tax return since I had not received the IR8A document from Mindef.

My attitude then was: 'Not my fault.'

For my non-compliance, I was slapped with a fine of $50 from Iras some time after the filing deadline, and a letter instructing me to file by a certain date or else be summoned to court. I quickly called Mindef for the document and filed accordingly. In hindsight, it was something that I should have done before the deadline.

Whether you are a new or existing taxpayer, here are the enforcement actions that you face if you do not file your tax returns on time:

Composition fee

Iras will send a letter telling you to file your tax return and pay the composition fee of up to $1,000 within 14 days from the date of the letter. The actual fee is dependent on your past filing and payment history.

Summons to attend court

A summons is an official order to appear in court. In other words, it is to inform you that prosecution action has started. It may be issued when your tax return is not filed by the due date.

If you receive a summons, you are required to turn up in court on the stipulated date. However, the summons will be withdrawn if you file your tax return and pay the composition fee at least four working days before the date fixed by the court.

Warrant of arrest

A warrant of arrest is an order from the court authorising the police to take a person into custody. It may be issued if you have not filed your income tax return, not paid the composition fee and not attended court on the stipulated date.

The police may arrest you or you may be asked to surrender yourself at the Warrant Enforcement Unit at Police Cantonment Complex.

When you report to the unit, you have to be accompanied by another individual who agrees to be your bailor. The latter has to pledge a sum of money as bail. This is because he will be responsible for you in case you don't appear in court on an assigned date. Should that happen, your bailor has to explain to the court why you were absent and the bail amount may be forfeited.

After you have reported to the unit, you will be given a new court date. You will have to file your tax return before this date and pay the composition fine. You are still required to appear in court so that your bailor's responsibility can be discharged.

Other legal actions
If you do not file your tax return for any year of assessment for two years or more, you will be slapped with a penalty equal to double the amount of tax that Iras may assess for that year of assessment and a fine of up to $1,000. If you cannot pay the penalty or fine, you will be jailed for up to six months.

As an added service which started last year, Iras is sending SMS reminders to taxpayers who filed late last year to encourage them to e-file earlier.

I'd urge readers to file early and not wait till the last minute. I had a bad experience a few years ago when my husband decided to file both our returns the evening before April 18 and he couldn't complete the e-filing because of the high Internet traffic. We ended up having to join a long queue of taxpayers at the Iras office in Newton Road the next day to complete the filing.

All credits and rights belong to Strait Times and Lorna Tan and thank you for this wonderful article...

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