Tax Evasion! Penalties can be lowered if doctors own up

Highlighting high-earning medical professionals who might be guilty of tax evasion, the Inland Revenue Authority of Singapore (Iras) has urged doctors to own up voluntarily with the promise of lower penalties.

The Singapore Medical Association (SMA) met members of the SMA last month and published an article, Useful Tax Pointers for Medical Practitioners, in their newsletter.

Towards doctors who voluntarily disclose their misdeeds, it said, “the penalty for such errors or omissions will be greatly reduced”.

Tax evasion is a criminal offence and the penalty could include a jail term of up to three years, a fine, and four times the amount of tax evaded.

The last time a doctor was jailed for tax evasion was in 2011.

Over a two-year period, the total tax evaded was $29,529. The doctor was jailed for six months and had to pay a penalty of $117,888.30.

The doctor was later suspended for four months for this by the Singapore Medical Council, the professional watchdog.

In the April article, Iras pointed out some common mistakes medical practitioners tend to make.

Examples include:

• Not reporting in full the fees collected for consultation or sale of medicine;

• Paying family members salaries far above the market rate;

• Including family holidays and the cost of having a private car as tax-deductible expenses;

• Claiming expenses without supporting receipts; and

• Setting up multiple companies for tax breaks.

Even doctors who are not out to cheat the taxman may file wrong returns.

The article added: “Most cases of non-compliance arise from negligence or insufficient understanding of tax matters.”

There is a big difference between tax avoidance and tax evasion.

In avoidance, the person fully declares his income, but tries to pay lower taxes by using possible loopholes, such as setting up a company simply for tax breaks, or claiming personal expenses as legitimate business expense.

The penalty for an “omission” is two times the taxable amount – so an under-declaration of $1,000 means having to pay the original $1,000 and a $2,000 penalty.

Whatever your profession, contact Value Accounting for an indepth consultation on how to lower your risks in tax non-compliance.

Value Accounting Tax Advisory

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