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Employers who abuse Jobs Support Scheme face fines, jail: Taxman

Iras reminded employers to ensure the correct amounts of CPF contributions have been made. ST PHOTO: KUA CHEE SIONG

The taxman has warned employers who abuse the Jobs Support Scheme (JSS) to obtain higher payouts that they would be charged under the Penal Code and face up to 10 years' imprisonment and a fine.

The Inland Revenue Authority of Singapore (Iras) also said yesterday it was aware of possible abuses by employers to get higher payouts.

"It is vital that employers contribute the right amount of CPF (Central Provident Fund) for bona fide employees based on the actual wages paid," it said. "(Such abuse) is dishonest and is unfair to the employees, other employers and society at large."

The scheme pays out 75 per cent of wages for April and May on the first $4,600 of a worker's gross monthly pay, and at least 25 per cent for a further eight months for specified sectors. Under the Fortitude Budget announced last month, the JSS was extended to 10 months, up from nine, with more firms receiving higher tiers of support.

Some unacceptable practices cited by Iras include:

• Making purported mandatory CPF contributions for non-genuine employees;

• Continuing purported CPF contributions for employees who have been retrenched or put on no-pay leave;

• Maintaining purported CPF contribution amounts based on past wages for employees who have suffered wage cuts;

• Increasing purported CPF contributions for employees without any actual wage increase;

• Inflating purported CPF contributions and deducting these excess contributions from employees' wages in cash; and

• Artificially splitting the wages of employees across multiple related business entities to overcome the salary limit for the JSS payout.

  • Examples of abuse

  • Making mandatory CPF contributions for non-genuine employees

    Employers should not make mandatory CPF contributions to individuals who are not their real employees. Those who provide personal information to employers to facilitate such abuse may be held criminally liable.

    Continuing mandatory CPF contributions for employees who have been retrenched or put on no-pay leave

    Employers should stop making mandatory contributions for such employees. But they can continue to make voluntary contributions to the CPF accounts of employees on no-pay leave, by applying for a separate CPF submission number with CPF Board.

    Maintaining mandatory CPF contribution amounts based on past wages for employees whose wages had been cut

    Mandatory CPF contributions are based on employees' wages, age and citizenship. A wage cut should see a corresponding decrease in CPF contributions.

    Increasing CPF contributions for employees whose actual wages have not gone up

    Mandatory CPF contributions are based on employees' wages, age and citizenship. The prevailing contribution rates can be found on the CPF website.

    Inflating mandatory CPF contributions and deducting the excess contributions from employees' wages in cash

    Employers should make only the correct amount of mandatory CPF contributions based on actual wages paid.

    Artificially splitting wages of employees across multiple related business entities

    Employers should make only mandatory CPF contributions to employees for the business entities they are working for, and not artificially split wages across related business entities to circumvent the $4,600 salary ceiling.

    Grace Ho

Iras reminded employers to ensure the correct amounts of CPF contributions for the months of February, March and April have been made, saying: "Employers are also to ensure that the amount of mandatory CPF contributions in subsequent months is accurate so that they receive the right amounts of JSS payout."

Iras is using data from multiple sources to identify risks, and has set up a team to prevent and detect abuses. As part of these efforts, Iras may write to employers asking them to conduct self-reviews, and to provide declarations or documents to prove their eligibility for payouts.

"The JSS payouts will be made only after these employers have submitted their declarations and verification done by Iras," it said.

It also noted the penalties are severe, including being charged under Section 420 of the Penal Code and facing up to 10 years' imprisonment and a fine.

Employers who have made incorrect mandatory CPF contributions to their employees and who would like to declare their errors may do so at go.gov.sg/jssreview. They will also need to rectify the errors via the CPF Online Application service by June 30. No action will be taken against them provided the disclosure is accurate and complete.

Businesses or individuals who wish to report potential abuses of the JSS to Iras, may send an e-mail to jssreport@iras.gov.sg or report online at go.gov.sg/jssreport.

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A version of this article appeared in the print edition of The Straits Times on June 04, 2020, with the headline Employers who abuse Jobs Support Scheme face fines, jail: Taxman. Subscribe