What is Auto-Inclusion Scheme (AIS) and why is this important for employers in Singapore?

Tax & Accounting

January 9, 2021

What is Auto-Inclusion Scheme (AIS) and why is this important for employers in Singapore?

From Year of Assessment (YA) 2021, participation in Auto-Inclusion Scheme (AIS) is compulsory for employers with 6 or more employees or who have received the “Notice to File Employment Income Of Employees Electronically under the AIS”.

Executive Summary

The penalty for non-compliance is a fine not exceeding $1,000 under Section 94 of the Income Tax Act. BusinessDistrict strongly encourage all employers regardless of the number of employees to join AIS employers as soon as practical to avoid unforeseen non-compliance.

What is Auto-Inclusion Scheme (AIS)?

Under this scheme, employers submit their employees’ employment income information of their employees to IRAS electronically. The submitted information will be automatically included in the employees’ income tax assessment so when employees file their tax returns, their employment income information would already have been auto-included. Here’s a glimpse of the entire process:

As an Employer…

You can register for the Auto-Inclusion Scheme (AIS) via my tax portal. The closing date is on 31st Dec 2021 for YA 2022.
You are required to prepare all your employees’ employment income information.
You’ll then submit the information using an AIS software by 1st March. (Alternatively, you may choose a peace-of-mind approach by having BusinessDistrict manage the entire process and submission on your behalf.)
You are strongly encouraged to submit by the 10th February to avoid the peak period rush.
You do not need to issue a hardcopy IR8A (Return of Employee’s Remuneration) and supporting forms to your employees— save the trees!
You may still wish to provide Statement of Earnings to your employees for their reference.
Inform your employees to file:
- AIS employers should inform their employees, including directors that they are still required to check and submit their Income Tax Returns if they have received a notification to File Income Tax Return from IRAS.
- Employers may use this message to inform their employees to file their tax returns promptly.

As Employees…

The submitted information will be automatically included in the employees’ income tax assessment so when employees file their tax returns, their employment income information would already have been auto-included.
They simply need to verify the employment income and deductions that have been auto-included in their online tax return.
If they are filing by paper, they should fill in ‘0’ for employment income and deductions that have been auto-included.
Your employees will benefit from a simpler tax filing process and may also enjoy the No-Fling Service (NFS).

Which groups of employees records should be submitted via the Auto-Inclusion Scheme (AIS)

Include:

Full-time resident employees
Part-time resident employees
Non-resident employees including those who are based overseas and are required to render service in Singapore during the year (exclude details of employment income where clearance has been filed company)
Directors including non-resident directors
Board members receiving board or committee member fees pensioners
Employees who have left the organization but we’re in receipt of income in the reporting year (e.g. stock option gains)
Partners; the income information of partners who are engaged under an employment contract with the partnership should be included in your submission.
Generally these partners do not assume the liabilities of the partnership and they do not have a share in the P&L of the partnership entity. Hence, they are considered employees of the partnership even though they have the title of partner.

Exclude:

Sole proprietors
Partners; since they are owners of their own businesses, the salaries drawn from the businesses are taxable as trade income. The income information of these partners should be excluded from your submission

Type of Employment Income information to submit as part of the Auto-Inclusion Scheme (AIS)

There are four form types

Form IR8A (Return of Employee’s Remuneration) is a mandatory form that contains the details of employee and employment income. This is one form you will have to prepare and submit for all employees as part of the AIS scheme.
The remaining three are supporting forms you need to submit them only when it is applicable for the employee:
- Form IR8S is a supporting form that contains the details of excess or voluntary CPF contribution by employer and refund from CPF board.
- Appendix 8A is the supporting form that contains the details of benefits-in-kind such as housing and accommodation benefits, car benefits, etc.
- Appendix 8B is the supporting form that contains the details of share options gains. It refers to gains or benefits from either employee stock option (ESOP) plans or other forms of employees share ownership (ESOW) plans.

The Auto-Inclusion Scheme (AIS) Submission Process

Authorise someone (such as BusinessDistrict or someone within your organisation) to submit electronically.
Submit to IRAS via one of the modes below:
1. Payroll software with AIS API service
2. Submit Employment Income Records at myTax Portal
Submit your employees’ employment income information electronically.

CPF Data Link-up Service

Once you are registered for Auto-Inclusion Scheme (AIS) scheme, you are encouraged to register for CPS Data Link-up service. This allows IRAS to obtain data such as annual income, deduction information and other CPF data of employees who are NRIC holders and pre-fill them at myTax Portal for employers to submit to IRAS with greater ease and convenience. The CPF Data Link-up Service registration for Year of Assessment (YA) 2021 is closed. Registration for YA 2022 will begin from 1 Apr 2021 to 31 Dec 2021. Learn more on IRAS website >>