Suppose you are a Singapore business owner who has not yet enrolled in the Auto-Inclusion Scheme (AIS). You must note in this case that, from 2021, employers are mandated to participate in the AIS if they have at least six employees or have received the “Notice to File Employment Income of Employees Electronically Under the Auto-Inclusion Scheme (AIS).” But what exactly is this AIS that all Singapore entrepreneurs need to be familiar with? Keep reading this article to find out.
What is AIS?
AIS is an arrangement by the Inland Revenue Authority of Singapore (IRAS) that allows employers to submit the income details of their employees electronically to a centralized digital platform. The system automatically uses such information to calculate the workers’ income tax. This arrangement also alleviates some of the strains associated with submitting annual tax returns, with MyTax IRAS providing easy access to the AIS registration process.
Who Is Eligible To Register For AIS?
To be eligible to participate in AIS, an employer must have at least six employees or receive a notice to file for AIS from IRAS. Secondly, the employer must also submit the details of the qualified workers to IRAS. The AIS, however, does apply to the great majority of employees, including those in the following categories:
- Employees who work permanently.
- Part-time employees.
- Non-resident personnel, including those based in other countries but obligated to provide services in Singapore at least once a year (excluding details of employment income for which the company has applied for a permit).
- Directors, including those who are not nationals.
- Members of the board who receive pensioner board or committee contributions.
- Former employees have departed the organisation but received compensation during the reporting year (for example, stock option gains).
- Partners. (Please keep in mind that you must submit income information for any of your partners required to do so under the partnership’s work contract). Generally, these partners are not personally liable for the partnership’s commitments and have no stake in the partnership’s profit and loss statement. As a result, even though they hold the partner title, they are regarded as partnership employees.
- Companies that have received a “Notice to File Electronically Under the Auto-Inclusion Scheme (AIS)” can file electronically.
Benefits of AIS
As a result of AIS’s significant role in streamlining the tax processes in Singapore, this provides long-term benefits for employees and the companies in question. These advantages are as follows:
- The simplification of filing income tax returns in Singapore for workers.
- Contributes to reducing tax evasion and improves the accuracy of tax returns submitted by employees in Singapore.
- Employees do not need to get hard copies of IR8As or supporting documents because their employers are not required to do so.
- Automatic information population. When an employee files his tax returns, his employment information will be automatically populated (they will not be required to re-enter the information previously submitted). This feature also enables staff to double-check information and point out inconsistencies.
- It uses less paper and therefore is more environmentally friendly.
- It is less difficult to make changes.
- Making modifications to individual line items on original tax return submissions is easier because the online filing process is more convenient.
How to Submit the AIS Form
To submit your AIS form, you must follow these steps:
Join the Auto-Inclusion Scheme (AIS). Employers can sign up for AIS by visiting the IRAS website, clicking on the “Digital Services” icon, and selecting the “Employers” option. If your business has already registered for AIS, you can proceed directly to the Submit Employment Income Records page.
You must present records of employees’ income. You might need to begin again with a new submission if you have any reason to edit any information. You have the option of correcting any errors in your previous submission. After that, you can begin entering employee data.
You should supply personal information about each employee. It can become laborious if you’re doing this on your own, especially if you have more than a few employees. Despite this, it’s a fairly essential form-filling exercise. Ensure that all information is entered correctly. Additionally, you can designate a third party/staff member to submit the information on your behalf, such as your company’s corporate secretarial department.
Note that employee identification numbers, complete names, and dates of birth are all required pieces of information. You must input their annual income, bonuses earned, and deductions for CPF, CDAC/ECF/MBMF/SINDA donations, and any life insurance premiums deducted from their paychecks to complete the form. As a result, if you are submitting the entries independently, ensure that you have this information with you.
Submissions are also required for the company’s director (including non-resident directors), board members who receive board/committee member fees, pensioners, and any former employees who received income from the organisation in 2020, the year of reporting but have since left.
All full-time and part-time resident employees, regardless of their employment status, must complete Form IRA8. Non-resident personnel based in another nation but required to serve in Singapore at least once a year must also be included. Depending on your post, you may also be required to submit additional forms, such as Appendix 8A, Appendix 8B, and Form IR8S.
Additional submissions of Appendix 8A, Appendix 8B, and Form IR8S
In addition to the IR8A, employees who have received non-cash benefits in place of cash remuneration must complete the following form. This category includes housing and related perks, as well as car benefits.
Along with the IR8A, you must complete Appendix 8B if any of your employees earned any gains or profits during the year via employee stock option (ESOP) plans or other types of employee share ownership (ESOW) schemes.
Form IR8S must be completed if you have made excessive CPF contributions to your employees’ wages and/or have claimed or intend to claim a refund for excessive CPF contributions to your employees’ salaries.
The AIS initiative is undoubtedly a brilliant idea that makes filing for income tax by workers in Singapore effortless. The process is pretty straightforward, and only registered businesses in Singapore can participate. Since employees cannot edit whatever information entered into the scheme by their employers, the employers, too, would have to ensure that they enter their workers’ details accurately.