444 employers have had their Jobs Support Scheme (JSS) payouts partially or fully denied by the Inland Revenue Authority of Singapore (IRAS), amounting to almost S$10mn.
According to a press release by IRAS, about 2,200 employers have been selected for review of the July 2020 JSS payouts. Among the cases under review, seven common "unacceptable" practices were observed as employers attempted to receive higher amounts of JSS payouts.
- #1 Employer places the employee on no-pay leave or retrenches the employee, but continues to make mandatory CPF contributions without change.
- #2 Employer cuts the employee’s monthly wage, but CPF contributions for employee continues without change.
- #3 Employer increases the employee’s mandatory CPF contribution, but the employee’s monthly wage remains the same.
In the above three practices, by making mandatory CPF contributions that are not reflective of the actual wages paid, employers will receive more JSS payout than they are entitled to.
- #4 The employee receives mandatory CPF contributions from an employer he/she does not work for.
- #5 Employer makes mandatory CPF contributions for a non-genuine employee.
Practices four and five are fraudulent arrangements. IRAS noted that employers should not make any mandatory CPF contributions to individuals who are not their actual employees.
- #6 Employer asks the employee to return a part of his/her monthly wage for the month in cash, while the employer continues making mandatory CPF contributions for the employee without change.
This practice is also a fraudulent arrangement. Employers are reminded to only make the right amount of mandatory CPF contributions based on the actual wages paid to their employees.
- #7 When the employee’s monthly wage exceeds S$4,600: The employer pays the employee the first S$4,600 directly, but informs him/her that the remaining amount will be paid by a related business entity that he/she did not work for.
IRAS noted that employers should only make mandatory CPF contributions to employees for the business entities they are working for, instead of artificially splitting the wages of its employees across related business entities to circumvent the S$4,600 salary ceiling.
IRAS will continue to review employers’ eligibility for the October 2020 JSS payouts.
Employers who abuse the JSS may be fined and jailed for up to 10 years
Other than having their JSS payouts denied, employers attempting to abuse the JSS may be liable for the offence of cheating under Section 420 of the Penal Code. If found guilty, they may be fined and imprisoned for up to 10 years.
Egregious cases of suspected abuse will be referred to the Police, four cases have already been referred
As part of IRAS' anti-gaming efforts to ensure that JSS payouts are fairly and correctly disbursed, employers under review would have their JSS payouts withheld until they can submit supporting documents to IRAS to verify the authenticity and accuracy of mandatory CPF contributions made. If issues are found during the review, the employer's payouts would be adjusted or denied.
Egregious cases would be referred to the Police, including cases where employers have submitted false documents to IRAS to substantiate their eligibility for the JSS.
IRAS has referred four such cases to the Police, and the Police is looking into the matter.
Close to 50 voluntarily disclosure of errors in CPF contributions, over 300 reports received from whistleblowers
To-date, close to 50 employers have voluntarily declared the incorrect mandatory CPF contributions that they have made for their employees. Their JSS payouts have been adjusted before disbursement.
Ahead of the October 2020 JSS payouts, employers are encouraged to review the mandatory CPF contributions for employees to ensure that they have contributed the appropriate amount, based on actual wages paid to bona fide employees.
IRAS has also received over 300 reports from whistleblowers on employers suspected to have abused the JSS. Each report will be assessed thoroughly.
The Jobs Support Scheme (JSS), was introduced in Unity Budget back in February and meant to cover the wages of employed workers up to August 2020.
On 17 August 2020, as part of an additional S$8bn worth of COVID-19 support measures, Minister for Finance, Coordinating Minister for Economic Policies, and Deputy Prime Minister Heng Swee Keat announced that it will be extended by up to seven months. The JSS now covers 10% to 50% of the first $4,600 of gross monthly wages paid to each local employee up to March 2021, with support adjusted based on the projected recovery of the different sectors.
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