A construction company and its director were each ordered by the court to pay a penalty of $191,268 - two times the amount of GST evaded - and a fine of $2,000 for failing to account for GST on the sale of a property at Woodlands Industrial Park.
Junling Construction & Engineering Pte Ltd ("Junling Construction & Engineering") and its director, Cheah Wai Fun, 52, were charged for not reporting the amount of GST collected from the sale of a property in the company's GST return in 2011.
Offence to omit output tax on sale of non-residential property
IRAS' investigations revealed that Junling Construction & Engineering sold a non-residential property at Woodlands Industrial Park on 9 Feb 2011. The buyer paid Junling Construction & Engineering $1.38 million for the property and $96,600 for the 7% GST on the selling price.
Cheah Wai Fun, who was responsible for filing GST returns and issuing tax invoices for Junling Construction & Engineering, did not account for the $96,600 collected as an output tax in the company's GST return for the accounting period ended 31 Mar 2011. As the director of Junling Construction & Engineering, Cheah Wai Fun had failed to ensure the accuracy of Junling Construction & Engineering's GST return.
Together, Junling Construction & Engineering and Cheah Wai Fun have to pay a total penalty of $382,536 and total fine of $4,000 for the GST offence.
Charging and Accounting for GST
Businesses may buy and sell properties in the course of their business. Under the GST law, GST-registered businesses have to account for GST collected on the sale of non-residential properties as an output tax in their GST returns. They can also claim the GST paid on the purchase of non-residential properties as an input tax in their GST returns.
Penalties for Making Incorrect GST Return
It is a serious offence to omit or understate output tax on sales. Offenders face a penalty that is double the amount of tax undercharged, and a fine not exceeding $5,000 or imprisonment of up to 3 years or both.
Source: IRAS, 29 Oct 2014