A DIRECTOR of a construction company was jailed for eight months on Friday for assisting the company to evade tax of $265,483.

Seah Boon Huat, 56, was also ordered to pay a penalty of $1.06 million, four times the tax evaded.

He is the first individual to be convicted under Section 96A of the Income Tax Act, enacted in 2003 to deter serious tax evasion such as preparing or keeping false books of accounts or other records.

A person convicted under this section may be liable to pay a penalty of four times the amount of tax evaded, a fine of up to $50,000 or a jail term of up to five years or both.

If Seah cannot pay the penalties, he will spend another 10 months behind bars.

In the same court, the company, Project Building Construction, was fined a total of $60,000 and ordered to pay a penalty of $1.06 million after admitting to two charges of keeping falsified records.

It had omitted income of $1.07 million from the year of assessment 2004 and $135,700 from the year of assessment 2005.

A court heard that Seah assisted Project to evade tax by creating fictitious sub-contractor payment records to support the fictitious claims for sub-contractor expenses.

He also forged the sub-contractors' signature on the cash payment vouchers by acknowledging receipt of payment supposedly made to them by the company.

The total amount of fictitious payments allegedly made by Project to the subcontractors amounted to $1.2 million and the total amount of tax undercharged totalled $265,483.

Four other similar charges against Seah and the company were taken into consideration during sentencing.