<TABLE cellSpacing=0 cellPadding=0 width="100%" border=0><TBODY><TR>Taxman ups scrutiny of family firms
</TR><!-- headline one : end --><TR>They are among the firms which are most likely to make errors in returns </TR><!-- Author --><TR><TD class="padlrt8 georgia11 darkgrey bold" colSpan=2>By Elizabeth Wilmot
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Iras will step up its audit and education efforts among family-owned and managed companies this year to remind them to keep proper accounting records. -- PHOTO: ISTOCKPHOTO
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<!-- START OF : div id="storytext"--><!-- more than 4 paragraphs -->THE tax office has warned that Singapore's 45,000 family-owned and managed businesses will be coming under extra scrutiny over their tax returns.
These firms have been identified as among those which are the most likely to make errors in their corporate tax returns, the Inland Revenue Authority of Singapore (Iras) said.
<TABLE width=200 align=left valign="top"><TBODY><TR><TD class=padr8><!-- Vodcast --><!-- Background Story --><STYLE type=text/css> #related .quote {background-color:#E7F7FF; padding:8px;margin:0px 0px 5px 0px;} #related .quote .headline {font-family: Verdana, Arial, Helvetica, sans-serif; font-size:10px;font-weight:bold; border-bottom:3px double #007BFF; color:#036; text-transform:uppercase; padding-bottom:5px;} #related .quote .text {font-size:11px;color:#036;padding:5px 0px;} </STYLE>'Family-owned and managed companies, which also tend to be small to medium in size, may not have put enough resources and attention on maintaining proper accounting records and meeting their tax obligations', says Iras.
From double-counting to improper claims
CORPORATE taxpayers have been making a host of mistakes in their income tax filing.
</TD></TR></TBODY></TABLE>About 131,000 companies are due to file corporate tax returns by Nov 30 but Iras says it intends to step up its auditing of family firms in particular.
'The issue is more acute for family-owned and managed businesses, as we see in the audit cases,' said Ms Sabina Cheong, assistant commissioner for the corporate tax division of Iras.
Indeed, out of 682 companies audited by Iras in the past two financial years, 143 of them had made erroneous income tax filings. And of these, 83 were family-owned and managed businesses.
Among mistakes made were improper record-keeping, claiming tax deductions for directors' private expenses, claiming for non-deductible expenses and understating income.
'We would like to get the message out to let them know that they have made those mistakes,' Ms Cheong said.
Filing corporate taxes is an annual affair. Form C is the main document to be filled out by companies. It is issued to companies in March each year, and a soft copy of the form is available online.
Companies can choose to send the completed Form C together with other relevant financial documents by post or via electronic means (e-filing).
Failure to file Form C on time is an offence, and directors may be fined up to a maximum of $1,000.
A person who files an incorrect return due to negligence or without reasonable excuse can be taken to court and if convicted, may face a penalty of up to 200 per cent of the tax undercharged and/or jail if prosecution is proceeded with.
Those guilty of fraud and serious tax evasion may pay a penalty of up to 400 per cent of the tax undercharged and/or jail if prosecution is proceeded with.
With such heavy penalties, one may wonder why these family firms are still falling short of the mark.
When queried about the issue, Iras said that 'family-owned and managed companies, which also tend to be small to medium in size, may not have put enough resources and attention on maintaining proper accounting records and meeting their tax obligations'.
Other reasons were ignorance, not seeing a difference between personal and business expenses as the company is family-owned, and accounts being audited by external auditors who do not inform the principals that personal expenses are not tax deductible.
Iras has also noticed that directors are not well-versed in accounting and tax matters and rely heavily on external auditors. Their focus is on running their business rather than checking accounts and tax computations.
However, KPMG, provider of audit, tax, financial and risk advisory, had differing views. Mr Owi Kek Hean, head of tax services at KPMG in Singapore, said: 'The issues surrounding mistakes made in tax compliance are not unique only to family-owned and managed businesses.'
Preliminary results from KPMG's Singapore Tax Survey 2008 of 237 organisations found that 67 per cent of organisations of all types, and not just family-owned businesses, admit facing resource constraints in coming up with timely and accurate calculations for tax compliance.
Still, Iras will be stepping up its audit and education efforts among family-owned and managed companies to inform them that it is necessary and important to keep proper accounting records and meet their tax obligations.
It also hopes to get the message out to companies which have made erroneous tax filings to come forward voluntarily to reveal their mistakes. In such cases, it will impose only a 10 per cent penalty of the tax undercharged.
Ms Cheong said: 'We hope that through highlighting the common mistakes that companies made in filing, there will be an improvement in the compliance rate for Form C filing and better accuracy in the reporting of their income.'
She added that Iras encourages companies to file on time by Nov 30. [email protected]
</TR><!-- headline one : end --><TR>They are among the firms which are most likely to make errors in returns </TR><!-- Author --><TR><TD class="padlrt8 georgia11 darkgrey bold" colSpan=2>By Elizabeth Wilmot
</TD></TR><!-- show image if available --><TR vAlign=bottom><TD width=330>
</TD><TD width=10>
Iras will step up its audit and education efforts among family-owned and managed companies this year to remind them to keep proper accounting records. -- PHOTO: ISTOCKPHOTO
</TD></TR></TBODY></TABLE>
<!-- START OF : div id="storytext"--><!-- more than 4 paragraphs -->THE tax office has warned that Singapore's 45,000 family-owned and managed businesses will be coming under extra scrutiny over their tax returns.
These firms have been identified as among those which are the most likely to make errors in their corporate tax returns, the Inland Revenue Authority of Singapore (Iras) said.
<TABLE width=200 align=left valign="top"><TBODY><TR><TD class=padr8><!-- Vodcast --><!-- Background Story --><STYLE type=text/css> #related .quote {background-color:#E7F7FF; padding:8px;margin:0px 0px 5px 0px;} #related .quote .headline {font-family: Verdana, Arial, Helvetica, sans-serif; font-size:10px;font-weight:bold; border-bottom:3px double #007BFF; color:#036; text-transform:uppercase; padding-bottom:5px;} #related .quote .text {font-size:11px;color:#036;padding:5px 0px;} </STYLE>'Family-owned and managed companies, which also tend to be small to medium in size, may not have put enough resources and attention on maintaining proper accounting records and meeting their tax obligations', says Iras.
From double-counting to improper claims
CORPORATE taxpayers have been making a host of mistakes in their income tax filing.
</TD></TR></TBODY></TABLE>About 131,000 companies are due to file corporate tax returns by Nov 30 but Iras says it intends to step up its auditing of family firms in particular.
'The issue is more acute for family-owned and managed businesses, as we see in the audit cases,' said Ms Sabina Cheong, assistant commissioner for the corporate tax division of Iras.
Indeed, out of 682 companies audited by Iras in the past two financial years, 143 of them had made erroneous income tax filings. And of these, 83 were family-owned and managed businesses.
Among mistakes made were improper record-keeping, claiming tax deductions for directors' private expenses, claiming for non-deductible expenses and understating income.
'We would like to get the message out to let them know that they have made those mistakes,' Ms Cheong said.
Filing corporate taxes is an annual affair. Form C is the main document to be filled out by companies. It is issued to companies in March each year, and a soft copy of the form is available online.
Companies can choose to send the completed Form C together with other relevant financial documents by post or via electronic means (e-filing).
Failure to file Form C on time is an offence, and directors may be fined up to a maximum of $1,000.
A person who files an incorrect return due to negligence or without reasonable excuse can be taken to court and if convicted, may face a penalty of up to 200 per cent of the tax undercharged and/or jail if prosecution is proceeded with.
Those guilty of fraud and serious tax evasion may pay a penalty of up to 400 per cent of the tax undercharged and/or jail if prosecution is proceeded with.
With such heavy penalties, one may wonder why these family firms are still falling short of the mark.
When queried about the issue, Iras said that 'family-owned and managed companies, which also tend to be small to medium in size, may not have put enough resources and attention on maintaining proper accounting records and meeting their tax obligations'.
Other reasons were ignorance, not seeing a difference between personal and business expenses as the company is family-owned, and accounts being audited by external auditors who do not inform the principals that personal expenses are not tax deductible.
Iras has also noticed that directors are not well-versed in accounting and tax matters and rely heavily on external auditors. Their focus is on running their business rather than checking accounts and tax computations.
However, KPMG, provider of audit, tax, financial and risk advisory, had differing views. Mr Owi Kek Hean, head of tax services at KPMG in Singapore, said: 'The issues surrounding mistakes made in tax compliance are not unique only to family-owned and managed businesses.'
Preliminary results from KPMG's Singapore Tax Survey 2008 of 237 organisations found that 67 per cent of organisations of all types, and not just family-owned businesses, admit facing resource constraints in coming up with timely and accurate calculations for tax compliance.
Still, Iras will be stepping up its audit and education efforts among family-owned and managed companies to inform them that it is necessary and important to keep proper accounting records and meet their tax obligations.
It also hopes to get the message out to companies which have made erroneous tax filings to come forward voluntarily to reveal their mistakes. In such cases, it will impose only a 10 per cent penalty of the tax undercharged.
Ms Cheong said: 'We hope that through highlighting the common mistakes that companies made in filing, there will be an improvement in the compliance rate for Form C filing and better accuracy in the reporting of their income.'
She added that Iras encourages companies to file on time by Nov 30. [email protected]
