How to Make Money Or How to End up Swimming with the Fishes

How to make quick money?

Be a tax fraud rat...er, I mean Tax Informer!

You will earn 50% of the tax gained from the tax recovered from the offender and... it's tax free! (but read on to hear the dangers!)

Okay, so we had a tax consultant give us an in-house talk about Taxes- Auditing & Investigations: How to be Prepared. It was very interesting, thorough and enlightening yet entertaining talk!

So, let me share a few things I learnt with everyone here.

1) Getting on their radar - The speaker has 43 years of experience in Tax - 35 years of those in the Inland Revenue Board (IRB). The usual people on the IRB's radars are non-fixed income individuals and businesses. Why not employees? Well, they are the easiest to check based on the

Apparently the IRB's computers does a comparison across the sector to see anyone who sticks out and also if the numbers look too consistent or fishy, then, that will give rise to an audit/investigation.

2) Are you a Mutual fund/Life Insurance dealer? Well, these are normal culprits of tax evasion and they are the bigger showoffs! Taking pictures of themselves on fancy holidays and equally fancy cars are dead giveaways! IRB will always check your expenses against your declared income and you will need to be able to justify the reason.

3) Myth - Counting plates? The Speaker said it's abit of a myth how IRB actually sits a hawker stalls and count plates. They do observe suspects and what they see has to match what is actually reported. For example, a store that empties it tills 3 times day, does it have 3 bank-ins in its bank accounts a day as well?

4)Going back to be an IRB informer, yes the reward are great and the speaker told us stories of friends and lovers betraying each other so be warned! This is another reason why you should not go around making enemies or better still, document and file your taxes properly to give them ammo to pin you down.

If you do become an IRB informer, be warned by how the speaker related that during one of his past investigation of a suspected tax offender, the suspect was willing to contest the investigation but.. even offerred RM50k to reveal the informer! And if the informer was revealed, one can only imagine what would happen to the informer or his family! So, it's a risky life indeed!

And remember... once a rat.. always a a rat!

Once a rat.. always a rat!

Any lessons to take away for you and me? Always have all your documentation kept properly! If you do come under suspicion, it will be for you to justify why you under declared or how that extra 100k is in your bank account. Stay calm, get your tax advisor and accountant and keep cool and don't let IRB frighten you if you have nothign to hide. The speaker said they usually can be very reasonable and would usually give you the benefit of the doubt.

Another follow-up post more on this perhaps when I have the time!