This year’s tax season is ending soon, but if you’ve yet to do your taxes, here’s something you need to know.
Do not claim tax reliefs if you’re not eligible for them. You make the jobs of officers at the Inland Revenue Authority of Singapore (IRAS) harder and your life harder as well—by having to pay tax penalties.
S$48 Million Worth of Extra Tax Bills Issued by IRAS in 2022 Due to Incorrect Tax Filings
On Wednesday (5 April), IRAS shared a post on Facebook detailing how they issued close to 100,000 additional tax bills to individuals in 2022 due to wrongful tax filings. These tax bills amounted to no small sum—$48 million.
The post even came with a few infographics explaining the common mistakes of Singaporeans regarding claims for tax relief.
I guess someone at IRAS got sick of OT-ing to deal with wrongful tax relief claims.
Wrongful Tax Filings: Failure to Meet Qualifying Conditions
The three musketeers of “tax reliefs claimed wrongfully” were spouse relief, child relief and parent relief. Claimants would claim these tax reliefs despite failing to meet the qualifying conditions.
For instance, say you fulfilled your tai tai dreams, and your husband now pays for all your shopping sprees and your Dyson hair dryer. He even bought you a space to decorate with adorable Sanrio plushies and rent out. The rental income you collect from this space exceeds $4,000 per year.
In this case, your hubby won’t be able to claim spouse relief since your annual income exceeds $4,000. For a taxpayer to claim tax reliefs which have to do with dependants, such as spouse relief, child relief or parent relief, one crucial requirement has to be fulfilled. That is, the annual income of the dependant in question should not exceed $4,000.
This annual income of a dependant is not restricted to that from employment. It includes trade income, interest from bank deposits and property rental income.
That includes income from national service. You cannot claim child relief if your botak child earned more than $4,000 last year from serving the nation.
Wrongful Tax Filings: Duplicate Claims Made By Two or More Taxpayers
Another common cause for these wrongful tax filings, which could get you in trouble, is when two or more taxpayers make duplicate claims for the same dependant.
According to IRAS, a few tax reliefs, “namely Parent Relief, Child Relief and Handicapped Sibling Relief, can be claimed by one taxpayer, or shared among taxpayers who supported the dependant”.
Duplicate claims made for these tax reliefs are considered wrongful. If you’re guilty of this, it’s likely that you just made another officer at IRAS consider quitting their job and also attracted an additional tax bill coming your way.
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For example, say you and your brother contributed to supporting your mother. You ta pau your mother’s favourite fish soup for her daily while your brother buys her her favourite “Goo-chi” and “Prata” bags.
If you and your brother file for the entire $9,000 claim of parent relief each, you probably just made yet another IRAS officer looking at your respective claims contemplate searching for “Resignation Letter Template”.
What you and your brother should have done in the circumstances was to claim $4,500 each in your respective tax relief claims.
Alternatively, say you also had to listen to your mother’s daily rants about Ah Hua from Tiong Bahru while your brother didn’t—perhaps you deserve to claim a more significant portion of the $9,000 tax relief than your brother. Whatever it is, the $9,000 parent relief claim should be appropriately apportioned between you and your brother before both of you claim for the tax relief.
A handy tip to remember this—a complete $9,000 claim is too good to be true lah. Remember that money doesn’t fall from the sky unless you’re Hui Ge performing “One Million” at a charity concert.
Wrongful Tax Claims are Subject to Penalties
Unless you’ve been living under a rock, you should know that filing incorrect tax returns attracts penalties.
Yet, with this many people filing their taxes incorrectly, perhaps what is needed is a reminder of how severe the consequences are should you file a wrongful tax claim.
After all, we are a “fine city”.
According to IRAS, if you file an incorrect tax return without reasonable excuse or through negligence, you are liable to face (a) a penalty up to 200% of the amount of tax undercharged, (b) a fine of up to $5,000, and/or (c) imprisonment of up to three years.
Of course, IRAS will decide on the penalties for such errors considering your circumstances, which, based on the IRAS website, including whether you’ve been compliant with your tax responsibilities or committed these errors with negligence and/or without reasonable excuse.
If you’ve already done your taxes for this tax season and suddenly remembered that you might have committed some of the mistakes above, fret not, you will not go to jail for three years immediately.
IRAS has encouraged those who realised they had made errors in their tax returns to disclose this to IRAS as soon as possible. Penalties may be reduced if you do so.
You can find out more about how to make a voluntary disclosure here.
Tax Filing Assistance Provided By IRAS
For the rest who’ve yet to do their taxes and are now over-paranoid of accidentally making errors in tax filings, IRAS has got you covered as well.
If you’re willing to drag yourself out of the house, you can head down to a ServiceSG centre or ServiceSG counter for assistance with your tax filing.
ServiceSG centres are located at Our Tampines Hub and One Punggol, while ServiceSG counters at community clubs (CCs) are at The Frontier CC, Nee Soon Central CC and Kampong Chai Chee CC.
Can’t find the time to head down to these ServiceSG centres and counters? (lazy, just say lah) You can also contact IRAS by chatting with them online, emailing via the myTax Portal, calling the IRAS helpline, or making a virtual appointment.
Regardless, note that the tax season ends on 18 April for e-filings. Do remember to do your taxes and avoid the relevant mistakes!
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