Insurance agent who under-declared $290,000 of income jailed 4 months, fined three times tax amount evaded

SINGAPORE - An insurance agent who under-declared his income by nearly $300,000 in order to evade paying more taxes was sentenced to four months' jail on Friday (May 24).

Allan Lam, who was with AXA Life Insurance, was also ordered to pay a penalty of $151,044 - three times the amount of taxes he evaded for the years of assessment 2013 and 2014.

The court heard that some time in July 2015, the Inland Revenue Authority of Singapore (Iras) requested Lam, 30, to carry out a self-review for his income tax declaration for 2013 and 2014.

Before the review, Lam had declared a total income of $137,754, after deducting $11,000 for business expenses, for the year of assessment 2014.

However, after the self-review, he adjusted the amount to $148,754, after taking into account a deduction of $287,320 in expenses.

After requests from Iras, Lam provided a breakdown of the business expenses claimed.

In the expenses breakdown for 2014, Lam included referral fees of $84,000 to three individuals, and forged 36 payments vouchers to support the false claims.

However, investigations by Iras revealed that none of the individuals had referred any clients to Lam to buy insurance, nor did they ever receive any money or referral fees from him.

Instead, Lam had used the personal particulars of the three individuals, who had bought insurance policies from him previously, to forge the payment vouchers.

Other business expenses for both years of assessment were also found to be false.

After the false claims were discovered, Lam tried to absolve himself from any wrongdoing by claiming that it was his ex-colleague who had assisted him to prepare the accounts and false expenses that were sent to Iras.

But he later admitted that he was the sole perpetrator who inflated his business expenses in order to evade additional income tax totalling $51,173.85.

In actual fact, after expenses, Lam had an income of $70,172 in 2013 and $401,356 in 2014.

 
 

Lam has since made partial restitution of $38,113.96 of the outstanding tax owed.

In its sentencing submissions, Iras Senior Tax Prosecutor Norman Teo said there was a significant degree of planning and premeditation on Lam's part.

The prosecution also submitted a new sentencing framework that led to a stiffer jail term for such offences, which would have previously resulted in a jail term of between one and two weeks.