$1 billion spent on tuition in one year

Figure is almost double the $650m spent by families 10 years ago: Survey
By Theresa Tan, The Sunday Times, 9 Nov 2014

Singapore's tuition industry is now worth more than a billion dollars.

The latest Household Expenditure Survey found that families spent $1.1 billion a year on tuition - almost double the $650 million spent a decade ago and a third more than the $820 million spent just five years ago.

The Department of Statistics, which polled more than 11,000 households between October 2012 and September last year, released the latest survey in September.

The average household spending on tuition rose from $54.70 a month 10 years ago, to $79.90 in the latest survey.

The department told The Sunday Times that along with spending more, there were also more households in the latest study - 1.2 million compared with 993,000 a decade ago.

Associate Professor Jason Tan of the National Institute of Education noted that tuition is no longer meant only to help weak or failing students pass their exams.

"Tuition has morphed into this huge industry to keep one's child ahead of the rest," said Prof Tan, who is doing a study on the perception of tuition. "Many tutors teach ahead of the school curriculum, so that the child has a competitive edge. Even students in the Gifted Education Programme have tuition."

He pointed to tuition programmes that have sprouted up to cater to students of varying abilities and for different purposes. These include classes to help pupils get into the Gifted Education Programme and courses to prepare students for entrance tests and interviews for the Direct School Admission scheme, which allows schools to accept students not just based on academic ability, but also on their talent in sports and the arts.

Given the growing size of the tuition industry and the numerous players ranging from fast-growing chains of tuition centres to one-man operations, the Inland Revenue Authority of Singapore has begun auditing tuition centre bosses and private tutors. It has found under-declaration of income to be a "common problem".

A growing number of tuition agencies attest to Singapore's ever-expanding demand for tuition.

There are 850 tuition centres and enrichment centres registered with the Education Ministry now, up from 800 last year and about 700 in 2012.

And some of these centres have expanded into chains.

Mind Stretcher Learning Centre, for example, grew to have 21 branches in just 12 years and now has at least 10,000 students, said co-founder Alvin Kuek.

He said the amount spent on tuition has grown in the past decade as tutors are also commanding higher salaries now - up to 50 per cent more - given the intense competition in the market for tutors. Hence, fees have gone up.

Mind Stretcher charges an average of $150 a month for group tuition in one primary school subject.

This is up from about $90 when the centre was started 12 years ago.

Manager Eddy Tan, 50, spends $1,800 per month on tuition for his three children, aged between 11 and 16.

He said: "My children asked for tuition as they felt they could not catch up in school. They said their teachers teach too fast.

"Everyone I see has tuition. So if you don't give your children tuition, they may lose out. It's the kiasu mentality."

Taxman checks on tutors, claws back $2.3 million
Under-declaration of income is common, IRAS finds in audit of 120 centres, tutors
By Theresa Tan, The Sunday Times, 9 Nov 2014

The taxman has clawed back more than $2.3 million in unpaid taxes and penalties from private tutors and tuition centre proprietors who under-declared their income.

An ongoing audit of players in the billion-dollar tuition industry has found under-declaring income to be a "common problem".

The Inland Revenue Authority of Singapore (IRAS) has audited more than 120 tuition centre owners and tutors over the past few years, and its biggest catch so far is a tuition centre owner who under-reported his agency's income by about $3.6 million over seven years.

He earned between $400,000 and $800,000 a year, but declared only $50,000 to $150,000.

His agency has two full-time tutors and hired up to 10 part-timers, depending on the number of students enrolled. As he came clean after IRAS wrote to him and asked him to review his tax submissions, he was not taken to court. But he had to pay a penalty twice the tax under-reported. In all, he paid almost $2 million in taxes and penalties.

IRAS regularly picks specific groups of self-employed individuals to audit to deter tax cheats. In recent years, it has checked on doctors, property agents and maid agents, among others. It recovered $3.2 million in taxes and penalties from over 130 doctors audited, The Straits Times reported last year.

In its tuition industry checks, IRAS found that besides under-declaring income such as from tuition fees, some agencies also omitted other sources of income, such as from the sale of course materials and registration fees.

Some tutors and centre owners also claimed for their personal expenses, such as personal phone bills, when these are not income tax deductible. Others made claims for business expenses based on estimates, without proper documentation.

IRAS is currently auditing about 50 more cases.

Industry insiders told The Sunday Times that top tutors can earn $1 million or more in a year. They estimate there are up to 20 such millionaire tutors here. These tutors specialise in teaching one subject, holding classes for up to 50 students at a time with rates that go up to $90 an hour per student.

But the average full-time tutor earns between $3,500 and $6,000 a month, those interviewed say.

But how much a tutor earns is really anyone's guess, as those who work from home do not issue receipts, unlike tuition agencies.

Contrary to popular perception, a tuition agency may not necessarily be a money spinner, said co-founder of Mind Stretcher Learning Centre Alvin Kuek.

He said: "I get offers to take over failing tuition centres all the time. The industry is very competitive and you have to constantly improve and add value for students or they will go to another person."

He has four friends who used to hold finance or engineering jobs and who started tuition agencies hoping to make their pot of gold. All failed within a few years, he said.

Meanwhile, IRAS tracks down tax evaders through various ways, including tip-offs.

In one case, a member of the public alerted IRAS that a man in his 40s was giving tuition from his home. The tutor had declared his income as between $30,000 and $40,000 a year when it was actually between $100,000 and $150,000.

He under-declared his income by more than half a million dollars over five years. He also paid his wife almost $50,000 a year for administrative work, a sum IRAS found "excessive". In the end, he had to pay taxes and penalties of close to $110,000.

An IRAS spokesman stressed that all tutors and agencies have to put in place a record-keeping system so that their income tax declarations are supported with the required documents, such as receipts, accounting records and bank statements.

"We want to encourage those who have freelance income from tuition and have yet to report them in their past income tax returns to come forward to voluntarily declare such income to us," the spokesman said.

"Voluntary declaration of omissions will result in a much lower penalty than omissions discovered by IRAS."

REWARDS FOR WHISTLE-BLOWERS

Whistle-blowers who report tax cheats can get a reward of up to $100,000 or 15 per cent of the tax recovered. The reward is paid if the tip-off leads to unpaid tax being recovered.

The Inland Revenue Authority of Singapore (IRAS) said the informants' identities will be kept secret.

Those with information can send an e-mail to ifd@iras.gov.sg or go in person to the Investigation and Forensics Division at IRAS, Revenue House, 55, Newton Road.

The millionaire tutor
By Theresa Tan, The Sunday Times, 9 Nov 2014

Mr Phang Yu Hon, 47, is a tuition millionaire and shows his income tax records readily to prove how much he earns and what he pays in taxes each year.

It took just two years for him to double his income from about half a million dollars in 2009 to $1 million in 2011.

All from teaching physics, and mostly to students from top schools such as Raffles Institution, Hwa Chong Institution and National Junior College - many already doing well, but keen to make sure they continue scoring As.

Mr Phang runs physics.com.sg, and is its only tutor. He says the secret to his success lies in running group sessions for 30 or more students at a time, and doing it all himself.

That, and a reputation that has kept students coming even as his fees rose to between $380 and $720 for four two-hour lessons.

Mr Phang was candid in describing his income to The Sunday Times, showing his tax records.

He recalled the year his income crossed $1 million and he had to pay taxes of $186,000. "My heart ached when I had to pay my tax bills. I can buy a Mercedes-Benz (with that sum)," he said.

But he said he was happy to pay more tax because he was earning a lot more. "I never imagined I would be so successful. It is beyond my wildest imagination," he said.

The former Raffles Institution student graduated from the National University of Singapore with first-class honours in electrical engineering and started working as an engineer.

He was earning $4,000 a month in his last job as a consultant, but longed to be his own boss and tried several businesses, including a tuition agency, where he matched tutors with students and received a commission.

Although he never trained to be a teacher, he discovered he had a flair for teaching when he had to step in for some of his tutors.

In 1997, he started tutoring full-time. In his first year, he earned less than $10,000. But over time, more students came.

In 2002, he decided to teach students in groups, instead of individually. That was when he saw his income balloon.

By 2008, he was earning about $20,000 a month. A year later, his earnings doubled, and just kept growing. As his reputation grew, he raised his fees. The number of students doubled.

Over the past two years, his income was an average of $830,000 a year.

Mr Phang has about 200 students, and he conducts lessons in a Bishan shophouse, with about 30 students in each class.

He works about 40 to 50 hours a week - 18 hours teaching, and the rest preparing for lessons, writing assessment books and doing his paperwork.

About two-thirds of his students are from top schools, and most are from upper middle-class families.

"Some students are already getting an A, but they come to me to make sure they continue getting As. Others want to improve their grades to get an A," he said.

About 10 to 20 per cent seek coaching above their level in school just to challenge themselves.

One boy not from a top school is Raphael Loh, 16, a Secondary 4 student at Whitley Secondary.

He went to Mr Phang last year when he was scoring Bs and Cs in school. With tuition, he started getting As and found himself working harder on physics.

He said being surrounded by top performers in his tuition class also spurred him on. His tuition costs $400 a month.

Although he is sitting the O levels, he started taking tuition in junior college level physics this year out of interest. He won a silver medal at this year's Singapore Junior Physics Olympiad, a national competition. He was the only neighbourhood school student to win a gold or silver medal.

Raphael said: "I was not motivated to study previously and I didn't pay attention in school, so my grades suffered. But as my parents paid so much for tuition, I would be wasting their money if I didn't pay attention during tuition."