Correct a mistake in your return and tell when you should object to an assessment.
After filing, you may find that a tax return for an earlier year was wrong, or that IRAS has assessed you for something you don't recognise. The fix depends on who made the mistake and whether the year has already been assessed, and in each case acting early keeps your options open.
There are two kinds of problem, and each is handled differently. In the first, you made the mistake: you left out income, claimed a relief you did not qualify for, or entered a wrong figure. The usual result is that you paid too little tax. In the second, you think IRAS made the mistake: the notice of assessment shows income you did not receive, leaves out a relief you claimed, or applies something incorrectly. The usual result is that you were charged too much, and this is the case where you object.
The notice of assessment is the IRAS notice showing the tax assessed for a year. It also states the objection time limit and the payment due date. Lesson 4.4 of the course "Reading the fine print: payslips, statements, policies and contracts" goes through one line by line.
Both kinds start the same way. Write down exactly what is wrong, which year it affects and what the correct figure should be, and gather the documents that prove it.
If you find your own mistake before the notice of assessment is issued, you can usually update or revise the return through the IRAS portal. IRAS explains how on its website. If the year has already been assessed, you tell IRAS about the error through its voluntary disclosure programme.
A voluntary disclosure means telling IRAS on your own about an error in an assessed return. To get lenient treatment, you come forward before IRAS starts asking questions or begins an audit, give full details and correct the error. The conditions, and what "voluntary" and "timely" mean in practice, are on the IRAS website.
IRAS generally treats a voluntary disclosure much more leniently than a problem it finds itself. When IRAS finds undeclared income, penalties can run to several times the tax undercharged, and serious cases can go further. A prompt voluntary disclosure usually means paying the tax owed plus a much smaller penalty, and sometimes no penalty. The worst position is knowing about a problem and waiting, because a disclosure works best before IRAS has contacted you.
After disclosing, wait for the revised assessment and pay the extra tax by the due date. Keep the disclosure, IRAS's replies, the revised notice and proof of payment, and file them with that year's records. Lesson 7.3, "Records to keep and the year-end routine", covers filing records for each year.
Darren earns tuition income on the side. He had already fixed this year's return when he realised that in each of the two previous years he had earned tuition income he did not declare. Both years had been assessed and paid. His first thought was to leave it alone because nobody had asked. His second was that waiting would make any IRAS letter worse.
He gathered his records for the two years: his PayNow history showing payments from parents, and receipts for worksheets and books. From these he worked out his net tuition income, about S$5,000 a year (an example figure). His chargeable income was about S$33,000 in each of those years, and using the practice table from lesson 1.4, "Rebuild your tax bill from scratch", he found the omission added about S$150 tax per year.
He made a voluntary disclosure through the IRAS portal, listing each year, the income left out and the expenses against it. A few weeks later IRAS issued revised assessments for both years, and he paid the extra tax by the due date.
He also changed a habit. Every Saturday evening he now enters his tuition records into the same spreadsheet, so the figure is ready when filing opens and nothing has to be rebuilt from memory.
An objection is a formal challenge to an assessment you think IRAS got wrong, made through the IRAS portal within a time limit counted from the date of the notice. IRAS states the limit on the notice and on its website. If you miss it, your options narrow sharply, so check the deadline on the day the notice arrives. The steps, in order:
On the day the notice arrives, check the objection deadline shown on it. Write down what is wrong, which year it affects and the correct figure, and gather the supporting documents. Lodge the objection through the IRAS portal, stating what is wrong, what the figure should be and why, with the documents attached. Pay the tax on the notice by its due date while the objection is reviewed. If the objection succeeds, IRAS refunds or adjusts the amount you paid. Keep all correspondence, the revised notice and proof of payment with that year's records.
The tax on the notice is still due by its due date even while you dispute it. Lesson 4.3, "Paying, GIRO instalments and objecting if something is wrong", in the course "Reading the fine print: payslips, statements, policies and contracts", covers the objection process and payment in detail.
Both routes reward speed: a voluntary disclosure works best before IRAS has contacted you, and an objection only works if you lodge it inside its deadline.
For the activity, write the steps you would take if you found an undeclared income item from last year, in the order you'd take them.
Say you found income from last year that you never declared. Write down, in order, what you would do about it.
Junxiong-WFG Organisation is an authorised representative of AIA Financial Advisers Private Limited (Reg. No. 201715016G).