Unusual treatment for UnUsUal Entertainment

multi million dollars from entertaining you

What is the law?
GST-registered businesses must charge GST output tax on the sale of their goods and services at the prevailing GST rate and account accurately to IRAS.

What happened?

IRAS found out that UnUsUal Entertainment ("UnUsUal") had wrongly declared or "under declared" its output tax for 2005 and 2006. UnUsUal had not included the GST collected on tickets sales for both years as output tax in its GST returns.

How did IRAS find out?
This is the interesting part. IRAS found that sales figures submitted by UnUsUal for income tax purposes did not tally with the sales figures reported for output tax for 2005 and 2006. For example, the sales revenue declared for 2005 income tax was $9,136,361.00, against the $2,810,668.00 declared as total sales in their GST returns in the same year.

The conviction demonstrates the effectiveness of inter-departmental sharing of information.

What is the side issue?
The GST submission and income tax computation was done by its tax agent. The case also reminded us that it was clearly stated that the responsibility of accounting for GST on ticket sales lies with taxpayer. However, UnUsUal failed to check the GST returns prepared by its tax agent, which resulted in incorrect tax returns.

What is the penalty?

UnUsUal was found guilty of wrongly stating the output tax in its Goods and Services Tax (GST) returns, resulting in an underpayment of $502,922.27 in GST.  UEPL was ordered to pay a penalty of $601,632.72 and a fine of $10,000.

UEPL pleaded guilty to four charges of under-declaration of GST without reasonable excuse.  Four remaining charges were taken into consideration for sentencing.

Adapted from IRAS Media Release.