THE taxman is coming down hard in cases where property tax has been unpaid for long periods, despite repeated efforts to recover the outstanding sums.
Yesterday, the Inland Revenue Authority of Singapore (Iras) auctioned off two pieces of land in Sixth Avenue for $2.5 million.
The drastic action - a last resort that has rarely been used by Iras - was to recover $306,213 in unpaid property tax dating back to 1998. The properties were part of the estates of the deceased owners.
The balance will be held in trust for the rightful owner.
Iras is stepping up its efforts to recover unpaid property tax, in a bid to reduce compliance costs.
Another two cases, where Iras has made numerous attempts to recover the tax, may end up on the auction block before year- end if the tax is not paid soon.
Under the law, Iras has the power to take possession of a property to sell it off to recover property tax.
Since 1995, Iras has auctioned just five properties. The last was in December last year.
Property tax is levied at 4 per cent of the annual value of a residential property which is owner-occupied.
For residential property which is rented out, along with vacant or commercial and industrial property, the rate is 10 per cent.
Usually, the bill is sent out in December for the following calendar year. The amount is due by Jan 31, after which a penalty rate of 5 per cent is imposed.
Still, property tax does not bring in much for Iras compared to other tax revenue.
Property tax collected was $1.5 billion out of total tax revenue of nearly $18 billion for the year ended March 31 last year.
The property tax arrears as at that date amounted to $84 million, only about 5 per cent of the total property tax collection.
Auctioning off a property is a last resort, Iras emphasised.
Iras issues reminders, notices to pay, makes phone calls and appoints banks as agents to try to recover the taxes.
It also visits the properties to talk to owners who are in financial difficulties and works out a repayment plan. In rare cases it even agrees to defer the taxes.
Last December, Iras auctioned off the equipment at a shipyard to settle the bulk of unpaid taxes. The owner paid the balance in cash. Iras left the factory and land untouched for the owner to continue operations.
According to Iras, it can take similar action to auction off HDB flats if tax is outstanding.
But to date, no HDB flat has been auctioned off by Iras. In any case, the property tax collected from HDB owners is very low - it was only about $51 million for the year ended March 31, 2005.
Yesterday, the two plots of land at Sixth Avenue, totalling 7,556 sq ft, were sold in a sale handled by Colliers International. The land forms part of the estates of Chua Yan and Chua Han Chew.
No descendant of either family seemed to be willing to settle the tax or take up the administration of the estates, said Iras.
After deducting the property tax and the costs of selling the property from the proceeds, the remainder will be kept in a trust account for the rightful owner, said Iras.
Yesterday's buyer was property developer Feature Land. Two of its directors are Daniel Teo and Teo Tong Wah - former presidents of the Real Estate Developers Association of Singapore.
In the two pending cases, a notice of sale was served last month.
One is a pre-war two-storey terrace house at 27, Onan Road, where about $12,800 is owed. The debt has been outstanding since 1997.
The property forms part of the estates of the late Sheikhah Fatimah Salim Mohamed Baobied and the late Shaika Aboobakar Omar Bilfagi.
The other case involves two pre-war two-storey houses in Emerald Hill Road. There is property tax due from July 2002 to December this year amounting to $25,200.
sushyan@sph.com.sg
LONGSTANDING ARREARS
Iras' drastic action, to recover $306,000 in property tax dating back to 1998, is a last resort which it rarely uses. Among other steps, it issues reminders, makes phone calls and appoints banks as agents to recover the taxes
