I got a reply from IRAS
Dear John
Generally, sections 14 and 15 of the Income Tax Act govern deductibility of expenses. Only expenses that are wholly and exclusively incurred in the production of income and are not private or capital in nature would rank for deduction.
If the salaries are not wholly and exclusively in the production of the income, they are not tax deductible.
Regards
Tng Peck Hua (Ms)
Corporate Tax Division
IRAS
Now the only letter tat was left is from the ministry of manpower
It still doesn't answer whether it is tax evasion to do so
I have already told you that on paper, I can employ someone to just merely answer phone calls, but in actual fact, give her no phone calls => do nothing. To that effect, I will be able to employ more FTs to do the job cheaper, which results in an increase in company income; it produces more income. This was mentioned to you a 2nd time in page 7, which you have till now no comments, but continuously tell me it is illegal since it will reduce company profits and reduce tax paid.
As I have mentioned to you, if the main aim was such that the employer can employ more foreign workers at a cheaper rate, the profit of the company will be increased, not reduced. Thus, (3) and (4) does not hold.
I know your point. You are still thinking about the evading of tax, which wasn't even the main aim here. The main aim was to increase company profit by being able to hire workers at an overall cheaper average rate to do the same things, and we are discussing based on the point that foreign workers are cheaper to the employer than local workers.
We can see from the letter that it is tax deductible if the salary is used in the production of income, from what was earlier told you three times, there will be an increase in company income.
And again, this was what you have said.
If I am not wrong, after giving business tax, u still have to give income tax since it is something u earn. If I am wrong, the tax rate for business and personal income is still different, especially when personal income have a lot of deductables. So do u think tat if I give all the business profit as salary to an individual, it is not considered as tax evasion ?
And for your statement in bold, no where was it stated that the salary you give to an employee have to comensurate the amount of contribution to the company; you can even give one million dollars to a receptionist just to answer phone calls on the handphone or at home, even though there might be no phone calls sent at all.
Do you still not understand what is meant by legal loopholes? It is a lot about the playing of words to make things legal, on paper and/or on accounts, be it unethical or dishonest a not.
I expect your letter to MOM to be a question on whether it is legal to employ someone in your company, but give that person nothing to do => employing someone to do nothing.
hey stupid,
The way you phrased your letter was bound to be rejected for deductability.
Suggest you write them another letter.
Tell them,
"Though these 10 people do not perform "physical task" in my retail shop, but their presence in the shop provides a conducive environment for patrons to make purchases in my shop for me to generate revenue, thus matching my revenue to their salaries. Thus the expenses are incurred wholly and exclusively for the purpose of generating income in my shop."
I have already told you that on paper, I can employ someone to just merely answer phone calls, but in actual fact, give her no phone calls => do nothing. To that effect, I will be able to employ more FTs to do the job cheaper, which results in an increase in company income; it produces more income. This was mentioned to you a 2nd time in page 7, which you have till now no comments, but continuously tell me it is illegal since it will reduce company profits and reduce tax paid.
Frankly speaking, when I read the letter sent by IRAS, it is clear tat there will be no tax evasion if u employ people to do nothing. Tis is because their salary will not be tax deductable.
However whether does your scheme in employing people to do nothing works, it has to depend on the response from the ministry of manpower.
hey stupid,
The way you phrased your letter was bound to be rejected for deductability.
Suggest you write them another letter.
Tell them,
"Though these 10 people do not perform "physical task" in my retail shop, but their presence in the shop provides a conducive environment for patrons to make purchases in my shop for me to generate revenue, thus matching my revenue to their salaries. Thus the expenses are incurred wholly and exclusively for the purpose of generating income in my shop."
Why don't u sent the letter yourself ? Frankly speaking I do not know how they will response to tis
Originally posted by stupidissmart:I have already told you that on paper, I can employ someone to just merely answer phone calls, but in actual fact, give her no phone calls => do nothing. To that effect, I will be able to employ more FTs to do the job cheaper, which results in an increase in company income; it produces more income. This was mentioned to you a 2nd time in page 7, which you have till now no comments, but continuously tell me it is illegal since it will reduce company profits and reduce tax paid.
Frankly speaking, when I read the letter sent by IRAS, it is clear tat there will be no tax evasion if u employ people to do nothing. Tis is because their salary will not be tax deductable.
However whether does your scheme in employing people to do nothing works, it has to depend on the response from the ministry of manpower.
hey stupid,
The way you phrased your letter was bound to be rejected for deductability.
Suggest you write them another letter.
Tell them,
"Though these 10 people do not perform "physical task" in my retail shop, but their presence in the shop provides a conducive environment for patrons to make purchases in my shop for me to generate revenue, thus matching my revenue to their salaries. Thus the expenses are incurred wholly and exclusively for the purpose of generating income in my shop."
Why don't u sent the letter yourself ? Frankly speaking I do not know how they will response to tis
Edited by stupidissmart 27 Jul `08, 1:32AM
Frankly speaking, when I read the letter sent by IRAS, it is clear tat there will be no tax evasion if u employ people to do nothing. Tis is because their salary will not be tax deductable.
I was shocked by your comprehension ability or disability, perhaps that is the reason why most disagreement occurs with you. You obviously don't understand the meaning of "tax evasion". Not being tax deductible does not mean it is not tax evasion, if it's not tax deductible and you file in your income tax returns as deductible, you would have committed tax evasion. Be it tax avoidance or tax evasion is a matter of the ability of your accountant.
The way you phrased your letter was equivalent to a lawyer on the defence of an accused submitting his plea as such, "My client stabbed the victim 20 times, there were 10 witnesses to the crime. My client is guilty as charged, what is the punishment?" As opposed to, "My client at the time of the offence was under the influence of psychotropic drugs which was used to control his schizophrenic tendencies. During the commission of the offence, my client was not of sound mind and therefore not in control of himself." One plea will land you on the gallows, while the other might land you in jail.
I don't need to assure myself that I am correct if you were to send that query in. I used to work as an auditor, there is no doubt in my mind that even if my employees performed no physical labour, but if their services are incurred wholly and exclusively for my business, I can get tax deductions.
stupid,
Ask this of you, a businessman with a chargeable income of $80,000 for year of assessment 2007 and tax charge of $11,200, decides to keep away from paying tax by giving his wife a 50% of his sole proprietorship company shares, thereby reducing their total tax payable from $11,200 to $6,800. The businessman effectively cheated IRAS by avoiding the difference of the two tax payable, which is $4,400.
Did he commit tax evasion?
However whether does your scheme in employing people to do nothing works, it has to depend on the response from the ministry of manpower.
Again, I'm telling you it is not my scheme. It is what is happening, and I personally know someone benefitting from it.
Ask this of you, a businessman with a chargeable income of $80,000 for year of assessment 2007 and tax charge of $11,200, decides to keep away from paying tax by giving his wife a 50% of his sole proprietorship company shares, thereby reducing their total tax payable from $11,200 to $6,800. The businessman effectively cheated IRAS by avoiding the difference of the two tax payable, which is $4,400.
I used to argue like the above, stating tat giving salary to people doing nothing is tax evasion.
The reply I got from IRAS is tat the profit from the company is still register as the one before u give the salary to the people. Tis is because they r not considered to be directly involved in the production and business and therefore it is not tax dedeuctable. Tat means u still have to pay the same business tax. If u pay lesser, then if they find out from the accounts and find evidence u did the above, then u have committed tax evasion
However if u r willing to pay the business tax, and wanted to employ imaginary people to offset the local to foreigner ratio, then it is not illegal from IRAS.
Of course, u can lie or claim tat the people u employed r all actually working for the company by just registering their name or something. If u wanna be dishonest, there r a million and one things u can do to reduce tax. U can claim the person is on long term MC, or claim he works and pull in business, or claim he is there to listen to imaginary phone calls, or claim many many incredible stuffs. If the gov found out, they can prosecute. Then tis become a case for lawyers between both parties to fight the case whether r they relevant or non relevant to the work generated, cheating or not cheating, and see wat the judges decide.
The way I phrase the letter is equivalent to how law stated examples for people to understand the law. It is simple and straight forward with the necessary ingredients which i wanted to include.
However if u r willing to pay the business tax, and wanted to employ imaginary people to offset the local to foreigner ratio, then it is not illegal from IRAS.
Again, I'm not sure if you have comprehension problems, but I'm telling you again that no imaginary people was employed; real people was employed.
Again, I'm not sure if you have comprehension problems, but I'm telling you again that no imaginary people was employed; real people was employed.
Ok, I should change the word to imaginary worker. The person do exist but he only appears to be working when he is not
Does anyone have any doubt that if you do not support the despots, employing an "imaginary worker" would be illegal but if you are a traitor to the country, it would be "overlooked"? This animal farm situation is why fair minded people leave ....
Originally posted by maurizio13:stupid,
Ask this of you, a businessman with a chargeable income of $80,000 for year of assessment 2007 and tax charge of $11,200, decides to keep away from paying tax by giving his wife a 50% of his sole proprietorship company shares, thereby reducing their total tax payable from $11,200 to $6,800. The businessman effectively cheated IRAS by avoiding the difference of the two tax payable, which is $4,400.
Did he commit tax evasion?
Maurizio,
How on earth can a company reduce its taxable income by changing the shareholding structure of the company? :)
Eagle, what is your comment on this?
Originally posted by stupidissmart:I used to argue like the above, stating tat giving salary to people doing nothing is tax evasion.
The reply I got from IRAS is tat the profit from the company is still register as the one before u give the salary to the people. Tis is because they r not considered to be directly involved in the production and business and therefore it is not tax dedeuctable. Tat means u still have to pay the same business tax. If u pay lesser, then if they find out from the accounts and find evidence u did the above, then u have committed tax evasion
However if u r willing to pay the business tax, and wanted to employ imaginary people to offset the local to foreigner ratio, then it is not illegal from IRAS.
Of course, u can lie or claim tat the people u employed r all actually working for the company by just registering their name or something. If u wanna be dishonest, there r a million and one things u can do to reduce tax. U can claim the person is on long term MC, or claim he works and pull in business, or claim he is there to listen to imaginary phone calls, or claim many many incredible stuffs. If the gov found out, they can prosecute. Then tis become a case for lawyers between both parties to fight the case whether r they relevant or non relevant to the work generated, cheating or not cheating, and see wat the judges decide.
The way I phrase the letter is equivalent to how law stated examples for people to understand the law. It is simple and straight forward with the necessary ingredients which i wanted to include.
Please don't insult me by associating me with you.
First of all, you went through all the mumbo jumbo and didn't even answer my simple question. Or you don't know the answer?
If a businessman wants to avoid paying tax, surely he won't be STUPID like you and tell IRAS what you just did in the query. Whether it's legal or legal rest with the ability of the tax accountant. If he employs staff to do nothing, surely he won't be stupid to tell the IRAS that they are doing nothing. If all the paper work is proper, there should be no questions about it's legality.
If the government finds out they can prosecute? You mean if I decide to pay my secretary $10,000 a month to make one cup of coffee during that one month, it is wrong. It's up to me to decide the job scope of my employees, if I so decide to pay $10,000 for my secretary to make me 1 cup of coffee, or sit around the office to do nothing for 1 minute, it's entirely my choice. IRAS can't dispute the salary I pay her. Funny how you claim that IRAS can claim it's illegal for me to pay what I choose to pay to my employees.
The way you phrased your query is to admit full guilt, it's not from the perspective of a businessman with tax avoidance on his agenda. Afterall, your point of contention is from the perspective of a businessman wanting to avoid tax, not from a halfwit claiming full responsibility of a crime when the verdict of guilt is straddled atop the fence.
Why not send it the letter of query written by me, see if it's legal.
Originally posted by maurizio13:
Please don't insult me by associating me with you.
That itself is the worst insult I have ever read in this forum....hahaha...
Originally posted by O o O:
That itself is the worst insult I have ever read in this forum....hahaha...
but worst insult, do you mean a very mean insult or a lame insult?
Originally posted by Beautiful951:but worst insult, do you mean a very mean insult or a lame insult?
Don't you see?
He meant that stupidissmart had given the worst insult he ever known to Maurizio13 by the association
Originally posted by eagle:Don't you see?
He meant that stupidissmart had given the worst insult he ever known to Maurizio13 by the association
What is your comment on the following statement from Maurizio13?
Ask this of you, a businessman with a chargeable income of $80,000 for year of assessment 2007 and tax charge of $11,200, decides to keep away from paying tax by giving his wife a 50% of his sole proprietorship company shares, thereby reducing their total tax payable from $11,200 to $6,800. The businessman effectively cheated IRAS by avoiding the difference of the two tax payable, which is $4,400.
Did he commit tax evasion?
Originally posted by O o O:
What is your comment on the following statement from Maurizio13?Ask this of you, a businessman with a chargeable income of $80,000 for year of assessment 2007 and tax charge of $11,200, decides to keep away from paying tax by giving his wife a 50% of his sole proprietorship company shares, thereby reducing their total tax payable from $11,200 to $6,800. The businessman effectively cheated IRAS by avoiding the difference of the two tax payable, which is $4,400.
Did he commit tax evasion?
Well, since "cheated" is there, I guess maybe possible?
Yawns. The troll likes to take questions from one person, then ask others to comment on it.
What a no-brainer. Fortunately our ministers are not like that; they answer the problems themselves, be it satisfactory a not; they do not ask the opposition or other people for comments like what has been done here.
Originally posted by eagle:Yawns. The troll likes to take questions from one person, then ask others to comment on it.
What a no-brainer. Fortunately our ministers are not like that; they answer the problems themselves, be it satisfactory a not; they do not ask the opposition or other people for comments like what has been done here.
Eagle, please stay focused
What is your comment on the following statement from Maurizio13?
Ask this of you, a businessman with a chargeable income of $80,000 for year of assessment 2007 and tax charge of $11,200, decides to keep away from paying tax by giving his wife a 50% of his sole proprietorship company shares, thereby reducing their total tax payable from $11,200 to $6,800. The businessman effectively cheated IRAS by avoiding the difference of the two tax payable, which is $4,400.
Did he commit tax evasion?
Seems like the autistic troll has changed his 'restricted interest' and 'repetitive behaviour' to taking
questions from one person, then ask others to comment on it.
Hmmm...
Originally posted by O o O:
Eagle, please stay focused
What is your comment on the following statement from Maurizio13?
Ask this of you, a businessman with a chargeable income of $80,000 for year of assessment 2007 and tax charge of $11,200, decides to keep away from paying tax by giving his wife a 50% of his sole proprietorship company shares, thereby reducing their total tax payable from $11,200 to $6,800. The businessman effectively cheated IRAS by avoiding the difference of the two tax payable, which is $4,400.
Did he commit tax evasion?
I already answer you liao lor
If a businessman wants to avoid paying tax, surely he won't be STUPID like you and tell IRAS what you just did in the query. Whether it's legal or legal rest with the ability of the tax accountant. If he employs staff to do nothing, surely he won't be stupid to tell the IRAS that they are doing nothing. If all the paper work is proper, there should be no questions about it's legality.
U r implying there is a dishonest element in the whole deal. Sure, u can bluff your way employing a guy who basically do nothing and claim he did a lot of thing, then have tis guy remit the money back to your bank. If u claim he did basically nothing, then tat is found not to be directly relevant to the whole deal and it is not tax deductable. However if the gov found out tat such a practise occurs, he can very well sue u. It is not about whether it can be discovered or not. It is about whether is the whole deal is illegal or not. I have already answered previously. However the concept is just too difficult for u to grasp
If the government finds out they can prosecute? You mean if I decide to pay my secretary $10,000 a month to make one cup of coffee during that one month, it is wrong. It's up to me to decide the job scope of my employees, if I so decide to pay $10,000 for my secretary to make me 1 cup of coffee, or sit around the office to do nothing for 1 minute, it's entirely my choice. IRAS can't dispute the salary I pay her. Funny how you claim that IRAS can claim it's illegal for me to pay what I choose to pay to my employees.
For the whole scheme to work, the secretary have to pay the money back to u. If she is found to be your close relative, then the whole deal is also dubious. U can free to give any pay to your secretary for doin nothing but it is not tax deductable. Tat is the bottomline
Why not send it the letter of query written by me, see if it's legal.
I do not want to be associated with so0meone like u either. Why don't u send your own letter
Originally posted by eagle:Seems like the autistic troll has changed his 'restricted interest' and 'repetitive behaviour' to taking
Hmmm...
Eagle, please dont talk behind my back. I choose to ask you because the below statement is related to your discussion on the subject.
Eagle, please stay focused
What is your comment on the following statement from Maurizio13?
Ask this of you, a businessman with a chargeable income of $80,000 for year of assessment 2007 and tax charge of $11,200, decides to keep away from paying tax by giving his wife a 50% of his sole proprietorship company shares, thereby reducing their total tax payable from $11,200 to $6,800. The businessman effectively cheated IRAS by avoiding the difference of the two tax payable, which is $4,400.
Did he commit tax evasion?
Originally posted by O o O:
Eagle, please dont talk behind my back. I choose to ask you because the below statement is related to your discussion on the subject.
Eagle, please stay focused
What is your comment on the following statement from Maurizio13?
Ask this of you, a businessman with a chargeable income of $80,000 for year of assessment 2007 and tax charge of $11,200, decides to keep away from paying tax by giving his wife a 50% of his sole proprietorship company shares, thereby reducing their total tax payable from $11,200 to $6,800. The businessman effectively cheated IRAS by avoiding the difference of the two tax payable, which is $4,400.
Did he commit tax evasion?I
I answer you how many times already huh?