INCOME TAX (Penalty for late payments)

Mr David Marshall asked the Minister for Finance (a) what is the policy of the Commissioner of Inland Revenue in the exercise of his discretion in respect of the imposition of the 5 per cent penalty for late payments of income tax during the currency of the year of taxation; and (b) whether the Minister has any information as to the policy of the Comptroller of Income Tax of the Federation of Malaya in respect of similar statutory discretion.

Dr Goh Keng Swee: Mr Speaker, Sir, late payment of income tax is not a problem to wage earners and salary earners who can arrange for monthly deductions to be made from their pay to the Income Tax Office, lt is a question lacing businessmen and capitalists. It is therefore refreshing to note that the Workers' Party is taking up the cudgels for the capitalists. The Commissioner of Inland Revenue has discretion to remit penalty or extend the date of payment where there are good reasons to do so. Normally a seven days' grace is given before the fine is sent and penalty imposed. Where a taxpayer is able to de monstrate that he cannot meet payment by the due date because of his absence From Malaya or sickness or other reasonable cause, remission of penalty may be granted on the individual :merits of the case. Deferred payment is also allowed in the case of a company which has commenced trading and instalments of payment are allowed on the second year of tax as a matter of practice.

The amount received by way of penalty in 1961 was $285,000 in Singapore. the amount in the Federation was about $259,000. I have no exact information as to the policy of the Comptroller of Income Tax in the Federation of Malaya in the exercise of statutory discretion in respect of the imposition of penalty. However, to judge by the amount of penalty imposed in the two territories, I would say that one territory is not very much out of line with the other.

Mr David Marshall: The Workers' Party is interested in justice for all. The workers or capitalists would inquire whether the Minister would consider remission of penalty where there is payment within the year of taxation. Where, for example, the taxpayer pays the 1962 tax during 1962.

Dr Goh Keng Swee: Such cases would arise when new companies are being established. As I mentioned in my answer, instalments and deferred payments are allowed as a matter of practice.