Revenue and Tax Law

• Author: TAN Kay Kheng LLB (Hons) (National University of Singapore); CDipAF (Association of Chartered Certified Accountants); MAcc (Charles Sturt University); MTax (University of New South Wales); MTS (Trinity Theological College); CTA, FCPA (Australia), ATA (Income Tax), FSIArb; Advocate and Solicitor (Singapore). Leonard GOH MA (Cambridge); Advocate and Solicitor (Singapore); Deputy Senior State Counsel, Legislation Division, Attorney-General's Chambers.
• Publication year: 2021
• Citation: (2021) 22 SAL Ann Rev 735
• Date: 01 December 2021

I. Introduction

26.1 The Supreme Court delivered four decisions in 2021 that had some relevance to revenue law:

Tax Type	High Court	Court of Appeal
Income tax	1	0
Property tax	1	1
Miscellaneous	0	1

26.2 One case relates to the prosecution of income tax offences where the High Court laid down a framework comprising sentencing benchmarks. Two cases relate to property tax. The remaining miscellaneous case deals with judicial review.

II. Income tax

A. Sentencing benchmarks for offences under section 96(1) of Income Tax Act

26.3 The High Court had the opportunity to review this issue in Tan Song Cheng v Public Prosecutor.1 Appeals against sentence from two unrelated Magistrate's Court decisions were heard together in this case.

26.4 In the first appeal, Tan Song Cheng had under-reported his share of trade income from a partnership and employment income from a company between 2009 and 2011. Tan was thus undercharged income tax of $34,992.26 in 2009 and $34,444.18 in 2011.2

26.5 Tan pleaded guilty to two charges under s 96(1)(b) of the Income Tax Act3 (“ITA”). Six similar charges under s 96(1) (amounting to a total of $119,186.21 in tax evaded) were taken into consideration for sentencing.4 The District Judge sentenced Tan to six weeks' imprisonment for each charge to run consecutively, that is, a total of 12 weeks' imprisonment.5

26.6 In the second appeal, Lin Shaohua had also under-reported her partnership income in 2016. Consequently, she was undercharged $79,142.13 in income tax. Lin pleaded guilty to one charge under s 96(1)(b) of the ITA. One other charge under s 96(1) of the ITA (for tax evasion of $7,654.46) was taken into consideration for sentencing.6 The District Judge sentenced her to ten weeks' imprisonment for the ITA offence.7

26.7 In both cases, the relevant portions of s 96(1) of the ITA provided:

Any person who wilfully with intent to evade or to assist any other person to evade tax, or to obtain or to assist any other person to obtain a PIC bonus or a higher amount of PIC bonus, or both —

…

(b) makes any false statement or entry in any return made under this Act or in any notice made under section 76(8)

…

shall be guilty of an offence for which, on conviction, he shall pay a penalty of treble —

(a) the amount of tax;

…

as the case may be, that has been undercharged, obtained, or undercharged and obtained as a result of the offence, or that would have been undercharged, obtained, or undercharged and obtained if the offence had not been detected, and shall also be liable to a fine not exceeding $10,000 or to imprisonment for a term not exceeding 3 years or to both.

26.8 The High Court dismissed both appellants' appeals against their respective sentences. See Kee Oon J noted that earlier decisions on s 96(1) did not show any consistent sentencing trend.8 He added that a sentencing framework capable of general application for such offences would be appropriate. This was reinforced by the fact that these offences did not appear to encompass a wide-ranging variety of circumstances.9 In addition, there was the relative paucity of reasoned decisions, lack of consistency in sentencing decisions, and the full sentencing range set out by Parliament had not been utilised.10 In this regard, See J accepted that the earlier case of Chng Gim Huat v Public Prosecutor11 did not lay down a sentence benchmark for s 96(1) offences.12

26.9 The High Court then proceeded to set out a sentencing framework for s 96(1) offences. See J started by considering the “offence-specific” and “offender-specific” factors relevant to sentencing considerations.13

(1) Offence-specific factors

26.10 These relate to the manner and mode in which the offence was committed. They comprise factors going towards (a) the harm caused by the offence; and (b) the offender's culpability.14 In the context of offences under s 96(1), he listed the following factors going towards the harm caused by the offence:15

(a) amount of income tax evaded;

(b) involvement of a syndicate; and

(c) involvement of a transnational element.

26.11 As regards the offender's culpability, the judge cited the following factors as relevant:16

(a) degree of planning and premeditation;

(b) sophistication of the systems and methods used to evade income tax or to avoid detection;

(c) evidence of a sustained period of offending;

(d) offender's role; and

(e) abuse of position and breach of trust.

(2) Offender-specific factors

26.12 These could comprise (a) aggravating and (b) mitigating factors. The judge listed the following as aggravating factors:17

(a) offences taken into consideration for the purpose of sentencing;

(b) relevant antecedents; and

(c) evident lack of remorse.

26.13 On the other hand, mitigating factors would be:18

(a) a guilty plea;

(b) voluntary restitution; and

(c) co-operation with the authorities.

(3) Sentencing framework

26.14 See J then adopted a five-step sentencing framework:

(a) First step: Identify the level of harm and level of culpability. He agreed with the Prosecution that the primary indicium of harm should be the amount of tax evaded.19 In this regard, he accepted three levels of severity of harm:20

(i) less than $75,000 of tax evaded (“Level 1” harm);

(ii) $75,000–$ 150,000 of tax evaded (“Level 2” harm); and

(iii) more than $150,000 of tax evaded (“Level 3” harm).

(b) Second step: Identify the applicable indicative sentencing range. The judge adopted the following indicative sentencing ranges in the Prosecution's sentencing matrix:21

But See J mentioned these ranges were not cast in stone.22 He added that the possibility of a non-custodial sentence should be considered where appropriate.23

(c) Third step: Identify the appropriate starting point within the indicative sentencing range. For this, the court will have to re-examine the offence-specific factors again. The court must be mindful to adjust the “severity” of the harm in relation to the other harm factors, as well as the culpability factors.24

(d) Fourth step: Make adjustments to the starting point to take into account offender-specific factors. See J held that it is possible for the adjustment to bring the sentence outside the indicative sentencing range, provided clear and coherent reasons are given.25 The court must consider the total amount of tax evaded at this step as well.26

(e) Fifth step: Make further adjustments to take into account the totality principle. The court must examine if the aggregate sentence is substantially above the sentences normally meted out for the most serious of the individual sentences committed. It must then consider whether the effect of the sentence on the offender is crushing and not in keeping with his past record and his future prospects.27

(4) Application of sentencing framework to the first appellant (Tan)

26.15 Examining the first two steps, the amount of tax which Tan had evaded under each charge was between $34,000 and $35,000. Both offences thus fell within Level 1 harm. From the facts, See J also accepted that Tan's culpability was low. Based on the sentencing matrix, the applicable sentencing range was up to six months' imprisonment.28

26.16 As for the third step, there were no other harm factors. Accordingly, See J agreed that the District Judge's “starting point” sentence of ten weeks' imprisonment was appropriate.29

26.17 Turning to the fourth step, See J accepted the six other charges under s 96(1) of the ITA (a total tax of $119,186.21 evaded) being taken into consideration for the purposes of sentencing as an aggravating factor.30

26.18 Finally, for the fifth step, the judge found the District Judge had not breached the one-transaction rule by ordering consecutive sentences. This was because each charge occurred in separate years of assessment.31

(5) Application of sentencing framework to the second appellant (Lin)

26.19 For the first two steps, the amount of tax which Lin had evaded was $79,142.13. This brought it under Level 2 harm. See J likewise accepted Lin's culpability was low from the facts. Based on the sentencing matrix, the applicable sentencing range was between six and 12 months' imprisonment.32

26.20 At the third step, there was similarly an absence of other harm factors. The amount of tax evaded ($79,142.13) was just between the two levels of harm. According, See J found that the District Judge's decision to adjust the indicative starting sentence downwards to 16 weeks' imprisonment was not wrong.33

26.21 For the fourth step, See J agreed that the additional charge under s 96(1) of the ITA (for tax evasion of $7,654.46) being taken into consideration for the purposes of sentencing was an aggravating

factor. See J also found that the District Judge had fully considered Lin's mitigating factors.34

26.22 Finally, as there was only one charge, See J saw no need to adjust the sentence of ten weeks' imprisonment on the basis of the totality principle.35

(6) Comments

26.23 The High Court has laid down a very useful sentencing framework for offences under s 96(1) of the ITA. This should provide more clarity and certainty for everyone examining s 96(1) offences and is a welcome development to the law.

III. Property tax

A. Annual value of “iFly Singapore”

26.24 Skyventure VWT Singapore Pte Ltd v Chief Assessor36 was a Court of Appeal decision relating to a property tax dispute involving certain machinery at a tourist attraction called the iFly Singapore (“iFly”). The High Court's decision was reviewed in the Annual Review last year.37 The Court of Appeal dismissed the appeal by the owner of the iFly.

26.25 Briefly, the iFly provided a simulated skydiving experience through the operation of a vertical wind tunnel, which caused an increase in the pressure and velocity of the airflow to be of a level at which it was suitable for simulated...