Tax evasion under Section 96 and 96A

For most of us, we should not bother to know the crime and punishment one could get for evading tax. We only need to know the law will come down hard on you.

But given the recent hoo and haah of going tax violators in the now glamourous occupation of being a hawker, it would be appropriate for our students and members of accounting profession to remind our clients of the consequences of tax evasion.

What is tax evasion?

Income tax evasion requires both a wilful intent to evade tax as well as one of five forms of physical conduct, namely:-

1. omitting from a tax return, income that should be included
   
2. making a false statement or entry in a tax return
   
3. giving a false answer, whether verbally or in writing, to any question or request for information from the IRAS
   
4. preparing or maintaining false books of account or other records, or authorising the same, or falsifying any books of account or other records
   
5. making use of any art, fraud or contrivance or authorising the use of any art, fraud or contrivance.

Punishment

Since December 2003, apart from the offence of tax evasion in Section 96 of the Income Tax Act, an offence of serious fraudulent tax evasion has been enacted under Section 96A.

The newer offence carries a heavier penalty, a higher fine and an extended jail time, for essentially some of the same acts that used to constitute ordinary tax evasion.

A person convicted of tax evasion under Section 96 faces a penalty of three times the tax evaded, a fine of up to $10,000 and a term of imprisonment of up to three years or both fine and jail.

The last two types of physical conduct listed above have been taken out from Section 96 and reinstated as new offences.

Under Section 96, there is a minimum jail sentence of six months upon a conviction for three or more offences, including assisting another to evade tax.

Under Section 96A, a person found guilty and convicted of two or more offences, also faces at least six months in jail.

Final Remark - I have done a simple format above for you to do email broadcasts to your hawker clients if necessary.