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LegalJune 11, 2021

High Court develops sentencing framework for offences punishable under s 96(1) of ITA

The High Court has developed a 5-step sentencing framework with respect to offences under s 96(1) of the Income Tax Act.

The High Court dismissed 2 taxpayer’s appeals against the Magistrates Court’s sentences imposed on their evasion of personal income tax as well as failure to register their businesses for goods and services tax (GST).

Background
Tan Song Cheng (Tan), was found guilty of evading personal income tax as well as failing to register his company (TNTPL) for GST.

Tan faced 8 charges for making false entries, with the wilful intent to evade tax, in his personal income tax returns for Years of Assessment (YA) 2009 to 2016. Tan had under-declared his trade and employment income totalling over $1.5 million. This had resulted in $188,622 in taxes undercharged for Tan.

In addition, Tan faced one charge of failing to register TNTPL for GST, when TNTPL had been liable to register for GST by 30 April 2010. This resulted in a failure to account for GST amounting to $33,315.

Lin Shaohua (Lin), had been convicted of evading income tax and failing to register for GST for her furniture-related partnership business (Furniture Collection Centre (FCC)).
Lin had failed to register for GST when FCC’s taxable supplies had exceeded $1 million by the quarter ending June 2010, which had resulted in $246,490 of GST undercharged. Lin had also wilfully with intent under-reported her share of partnership profits amounting to $444,870 in her income tax returns for YA 2016.

The Magistrate Court’s sentences
For his income tax charges, the Magistrates Court sentenced Tan to 12 weeks’ imprisonment and a penalty of $208,309. The penalty imposed is 3 times the amount of income tax evaded.

In addition, for failing to register TNTPL for GST, Tan was ordered to pay a penalty of $3,332 and a fine of $2,000.

For the income tax evasion, the Magistrates Court sentenced Lin to a jail term of 10 weeks’ and a penalty of $237,426, which is 3 times the income tax amount evaded.
The Magistrates Court also imposed on Lin a penalty of $24,649 and a fine of $4,000 for failing to register FCC for GST.

High Court’s findings
As the issues concerning both appeals were substantially the same, the High Court heard both appeals together.
The issues before the High Court were:

  1. whether it was appropriate for the court to develop a sentencing framework for offences under s 96(1) of the Income Tax Act
  2. to consider what an appropriate framework might be.

The High Court found:

  1. a sentencing framework is called for with respect to offences under s 96(1) of the Income Tax Act
  2. many of the offence-specific factors listed in Logachev Vladislav v Public Prosecutor [2018] 4 SLR 609 (the Logachev Case) are also present and relevant to offences involving tax evasion
  3. the 5-step sentencing framework in the Logachev Case can be transposed to offences punishable under s 96(1) of the Income Tax Act, which would apply to offenders who claim trial.

Applying the 5-step sentencing framework to Tan and Lim, the High Court was of the view that the individual and aggregate sentences in respect of both Tan and Lim were not manifestly excessive. The appeals were therefore dismissed.

Source: Tan Song Cheng v Public Prosecutor and another appeal (2021) MSTC ¶70-571, High Court, Singapore, 9 June 2021.

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