Controlling director fined $25k, ordered to pay $955,580 penalty for declaring incorrect expenses of directors' fees

SINGAPORE – A company’s controlling director was fined $25,000 and ordered to pay a penalty of $955,580 on Monday (July 27) for declaring incorrect expenses of directors’ fees in corporate income tax returns.

Tan Hwa Luck, 75, was charged with giving incorrect information without any reasonable excuse in Hwa Luck Investments’ corporate income tax returns, resulting in a total tax undercharged of $763,285 between 1995 and 2007.

Hwa Luck Investments had declared in its corporate income tax returns that directors’ fees amounting to a total of $3,386,000 had been incurred as expenditures between 1995 and 2007.

During an audit conducted by the Inland Revenue Authority of Singapore (Iras) between 2012 and 2013, Tan claimed that the directors’ fees were paid out to four directors in two lump-sum payments in 2006 and 2009.

To substantiate his claims, Tan presented cheques, payment vouchers and bank statements to Iras.

However, investigations revealed that the four directors did not receive any lump-sum payment of directors’ fees, and that the payee of the lump-sum directors’ fees was Tan. The monies were eventually routed back into Hwa Luck Investment’s corporate bank account.

Of the 13 charges Tan initially faced, only five charges – for which tax undercharged amounted to $477,790 – proceeded to court.

The remaining eight charges were taken into consideration for the purposes of sentencing.

In a statement issued on Monday, Iras reminded members of the public that any business that gives incorrect information in its income tax returns without reasonable excuse may face a penalty that is twice the amount of tax undercharged, and jail.

Those who help the authorities bring errant businesses and individuals to task will be rewarded with 15 per cent of the tax recovered, capped at $100,000.

All payments are at the discretion of the Comptroller and Iras will ensure that the identities of informants are kept strictly confidential.

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