Finance
Should you care if your car insurance plan covers flood damage?
by ValuePenguin
You might assume that, in tropical Singapore, your car insurance plan must certainly cover flood damage to your car. After all, floods aren’t exactly uncommon here. However, upon reading through policy documents from major Singapore insurers, our team at ValuePenguin found that this is not always the case. So how serious are the risks of flood in Singapore, and how much importance should you assign to flood damage coverage when shopping for car insurance?
Who Covers Flood Damage – and Who Doesn’t?
Our study found that while many major insurers’ car insurance policies do cover flood damage, some do not. Whether flood damage is covered tends to be hidden in the policy wordings of the insurance plans, documents filled with small print. Not only that, while you might think that car insurance plans that don’t cover flood damage would cost less than plans that do, this is not necessarily the case.
For instance, our March 2017 study of the cheapest car insurance policies in Singapore showed that FWD, an insurer that does not cover flood damage, tends to offer one of the the cheapest premiums in the market for a 2016 Honda HR-V. However, our survey of car insurance premiums for different types of cars (including sedans and SUVs) revealed that car insurance plans that fail to cover flood damage were not necessarily cheaper than plans that do cover flood.
Is it Worth Paying for Flood Coverage?
Let’s suppose that for your driver profile, car make and model, the cheapest insurance plans on the market happen to be the ones that do not cover flood damage. Is it worth paying a higher premium to ensure your peace of mind? To answer this question properly, you should know what the risks of flood damage actually are. So we took a look at how often floods occur in Singapore, and where they tend to occur.
As a country with a tropical climate, Singapore experiences monsoon season twice a year and is well-accustomed to heavy rains. A 2016 study of Singapore flooding patterns published by researchers at the National University of Singapore showed that from 1965 to 2015, there has been an average of 4.2 reported floods (flash and non-flash) a year. So far in 2017, there have already been a total of 13 instances of flash flooding in Singapore this year, although the city-state has worked hard over the years to minimise the effect of intense rainfall and prevent flooding.
The following map displays the current flood-prone areas and flood hotspots in Singapore, based on the most recent data published by Singapore’s Public Utilities Board (PUB). The PUB describes “flood prone” areas as those which are low-lying and have a history of flooding, whereas “hotspots” are areas that are not low-lying but have still experienced flash floods. If you drive through or park your car in these relatively high-risk areas frequently, it may pay off to make sure your car insurance policy covers you for flood damage.
Parting Thoughts
What our study makes clear is how important it is for you to be fully aware of all your options as you shop for car insurance. In some cases, the appeal of a cheaper premium may disguise the absence of a feature that you may actually consider quite important, be it flood damage coverage or something else. If you’re interested in learning more about how to choose the best car insurance plan for your needs and preferences, consider reading our guide on how to choose the best car insurance.
This article was first published at ValuePenguin.
Finance
CPF Special, MediSave, and Retirement accounts’ interest rate rises to 4.14% for Q4 2024
The Central Provident Fund (CPF) Board and Housing and Development Board (HDB) announced that the interest rate for CPF Special, MediSave, and Retirement accounts will increase to 4.14% in Q4 2024, up from 4.08%. The 4% floor rate will be extended for another year, providing members with stability amid a volatile interest environment, the announcement stated.
SINGAPORE: In a joint announcement on Friday (20 September), the Central Provident Fund (CPF) Board and the Housing and Development Board (HDB) revealed that the interest rate for CPF Special, MediSave, and Retirement accounts will rise to 4.14% for the fourth quarter of 2024, up from 4.08% in the previous quarter.
This increase, effective from October to December, comes as the pegged rate exceeds the established floor rate of 4%.
Finance
US taxation authority to pursue wealthy tax evaders with advanced AI tools
The Internal Revenue Service (IRS) of United States has announced a comprehensive initiative aimed at aggressively pursuing individuals and entities that owe substantial amounts in overdue taxes.
Under the initiative, 1,600 millionaires and 75 large business partnerships are the primary focus of the IRS’s intensified “compliance efforts.”
WASHINGTON, UNITED STATES: The Internal Revenue Service (IRS) announced last Friday (8 Sept), that it is embarking on an ambitious mission to aggressively target 1,600 millionaires and 75 large business partnerships that collectively owe hundreds of millions of dollars in overdue taxes.
IRS Commissioner Daniel Werfel revealed that with increased federal funding and the aid of cutting-edge artificial intelligence tools, the agency is poised to take robust action against affluent individuals who have been accused of evading their tax obligations.
During a call with reporters to provide a preview of the announcement, Commissioner Werfel expressed his frustration at the contrast between individuals who dutifully pay their taxes on time and those wealthy filers who, in his words, have “cut corners” when it comes to fulfilling their tax responsibilities.
“If you pay your taxes on time it should be particularly frustrating when you see that wealthy filers are not,” he said.
The IRS’s latest initiative targets 1,600 millionaires, each of whom owes a minimum of US$250,000 in back taxes, along with 75 large business partnerships boasting average assets of approximately US$10 billion.
These entities are now under the spotlight of the IRS’s renewed “compliance efforts.”
Werfel emphasised that a substantial hiring campaign and the implementation of artificial intelligence research tools, developed both by IRS personnel and contractors, will play pivotal roles in identifying and pursuing wealthy tax evaders.
This proactive approach by the IRS aims to highlight positive outcomes resulting from the increased funding it has received under President Joe Biden’s Democratic administration.
Notably, this move comes amid efforts by Republican members of Congress to reassess and potentially reduce the agency’s funding allocation.
IRS has introduced an extensive programme aimed at revitalisng fairness within the tax system
The IRS announced the groundbreaking move aimed at enhancing tax compliance and fairness, with a particular focus on high-income earners, partnerships, large corporations, and promoters who may be abusing the nation’s tax laws.
This initiative follows the allocation of funding under the Inflation Reduction Act (IRA) and a comprehensive review of enforcement strategies.
The new effort, which builds on the groundwork laid following last August’s IRA funding, will place increased attention on individuals with higher incomes and partnerships, both of which have experienced significant drops in audit rates over the past decade.
These changes will be facilitated through the implementation of advanced technology and Artificial Intelligence (AI) tools, empowering IRS compliance teams to more effectively detect tax evasion, identify emerging compliance challenges, and improve the selection of audit cases to prevent unnecessary “no-change” audits that burden taxpayers.
As part of the effort, the IRS will also ensure audit rates do not increase for those earning less than $400,000 a year.
Additionally, the agency will introduce new safeguards to protect those claiming the Earned Income Tax Credit (EITC).
The EITC is intended to assist workers with modest incomes, and despite recent years seeing high audit rates for EITC recipients, audit rates for individuals with higher incomes, partnerships, and those with complex tax situations have plummeted.
The IRS will also take measures to prevent unscrupulous tax preparers from exploiting individuals claiming these vital tax credits.
This move underscores the IRS’s commitment to fostering a fair and equitable tax system, ensuring that all taxpayers, regardless of income or complexity, are held to the same standards of compliance and accountability.
The initiative reflects a comprehensive approach to addressing disparities in tax enforcement and strengthening the integrity of the tax system for the benefit of all Americans.
“This new compliance push makes good on the promise of the Inflation Reduction Act to ensure the IRS holds our wealthiest filers accountable to pay the full amount of what they owe.
“The years of underfunding that predated the Inflation Reduction Act led to the lowest audit rate of wealthy filers in our history. I am committed to reversing this trend, making sure that new funding will mean more effective compliance efforts on the wealthy, while middle- and low-income filers will continue to see no change in historically low pre-IRA audit rates for years to come,”
“The nation relies on the IRS to collect funding for every critical government mission, from keeping our skies safe, our food safe and our homeland safe. It’s critical that the agency addresses fundamental gaps in tax compliance that have grown during the last decade,” Werfel said.
Major expansion in high-income/high wealth and partnership compliance work
Prioritisation of high-income cases: Under the High Wealth, High Balance Due Taxpayer Field Initiative, the IRS is intensifying efforts to address taxpayers with total positive income exceeding US$1 million and recognised tax debts of more than US$250,000.
Building on prior successes, which resulted in the collection of US$38 million from over 175 high-income earners, the IRS is allocating additional resources to focus on these high-end collection cases in Fiscal Year 2024.
The agency is proactively reaching out to approximately 1,600 taxpayers in this category who collectively owe substantial sums in taxes.
Expansion of pilot focused on largest partnerships leveraging Artificial Intelligence (AI): Recognising the complexity of tax issues in large partnerships, the IRS is expanding its Large Partnership Compliance (LPC) programme.
Leveraging cutting-edge Artificial Intelligence (AI) technology, the IRS is collaborating with experts in data science and tax enforcement to identify potential compliance risks in partnership tax, general income tax, accounting, and international tax.
By the end of the month, the IRS will initiate examinations of 75 of the largest partnerships in the United States, encompassing diverse industries such as hedge funds, real estate investment partnerships, publicly traded partnerships, large law firms, and more. These partnerships each possess assets exceeding US$10 billion on average.
Greater focus on partnership issues through compliance letters: The IRS has identified ongoing discrepancies in balance sheets within partnerships with assets exceeding US$10 million, indicating potential non-compliance.
Many taxpayers filing partnership returns are reporting discrepancies in the millions of dollars between year-end and year-beginning balances, often without attaching required explanations.
This effort aims to address balance sheet discrepancies swiftly, with an initial mailing of around 500 partnership notices set to begin in early October.
Depending on the response, the IRS will incorporate these cases into the audit process for further examination.
Priority areas for targeted compliance work in FY 2024
The IRS has launched numerous compliance efforts to address serious issues being seen. Some of these, like abusive micro-captive insurance arrangements and syndicated conservation easement abuses, have received extensive public attention. But much more work continues behind the scenes on other issues.
Among some of the additional priority areas the IRS will be focused on that will touch the wealthy evaders include:
Expanded work on digital assets: The IRS is continuing its expansion of efforts related to digital assets, encompassing initiatives such as the John Doe summons and the recent release of proposed broker reporting regulations.
The IRS’s Virtual Currency Compliance Campaign, which aims to ensure compliance with tax obligations related to digital currencies, will persist in the coming months.
An initial review has indicated a potential non-compliance rate of 75% among taxpayers identified through record production from digital currency exchanges.
The IRS anticipates the development of additional digital asset cases for further compliance efforts in early Fiscal Year 2024.
More scrutiny on FBAR violations: High-income taxpayers across various segments have been utilising foreign bank accounts to avoid disclosure and related tax obligations.
US individuals with a financial interest in foreign financial accounts exceeding US$10,000 at any point in the year are required to file a Report of Foreign Bank and Financial Accounts (FBAR).
The IRS’s analysis of multi-year filing patterns has revealed hundreds of potential FBAR non-filers with average account balances exceeding US$1.4 million. In response, the IRS plans to audit the most egregious potential non-filer FBAR cases in Fiscal Year 2024.
Labour brokers: The IRS has identified instances in which construction contractors are making payments to apparent subcontractors via Form 1099-MISC/1099-NEC, yet these subcontractors are, in fact, “shell” companies lacking a legitimate business relationship with the contractor.
Funds paid to these shell companies are routed through Money Service Businesses or accounts associated with the shell company before being returned to the original contractor. This scheme has been observed in states like Texas and Florida.
The IRS is expanding its attention in this area, conducting civil audits and launching criminal investigations to address non-compliance.
This effort is aimed at improving overall compliance, ensuring proper employment tax withholding for vulnerable workers, and creating a fairer playing field for contractors adhering to the rules.
-
Comments7 days ago
LHL’s 15-minute visit to Dr Lee Wei Ling’s wake raises eyebrows among Singaporeans
-
Singapore1 week ago
Media presence at Lee Wei Ling’s funeral contradicts family’s request for privacy
-
Opinion7 days ago
Police say LHY and LSF free to return, but risk of arrest and passport seizure remains
-
Singapore5 days ago
PM Wong’s budget flight homecoming via Scoot makes headlines, but why?
-
Current Affairs2 weeks ago
TJC issued 3rd POFMA order under Minister K Shanmugam for alleged falsehoods
-
Editorial3 days ago
Lim Boon Heng’s misleading claims & omission in July ST interview on Income-Allianz deal
-
Singapore1 week ago
Dr Lee Wei Ling, daughter of Singapore’s founding prime minister, passes away at 69
-
Civil Society1 week ago
Singaporean groups urge foreign minister to expedite recognition of Palestine