The Auto Inclusion Scheme (AIS) is a tax scheme geared towards Singapore employers and administered by the Internal Revenue Authority of Singapore (IRAS). It allows employers to submit the income tax information of their employees electronically.
The purpose of this scheme is to facilitate the calculation of income taxes for employees in Singapore by including the information provided by their employers through AIS automatically when they are preparing their income tax filing.
AIS aims to simplify the task of filing tax returns on a yearly basis. The convenience of this arrangement is crucial this Tax Season 2020, during complications caused by the recent Circuit Breaker measures.
To ease the process of filing future tax returns, new Singapore employers may also opt to register for AIS for the Year of Assessment (YA) 2021 from April 1, 2020 to December 31, 2020.
The registration process can be completed electronically through the IRAS myTax portal.
Checking if Your Business is Part of the Auto Inclusion Scheme (AIS)
In accordance with the Singapore Income Tax Act, registering and submitting employee information through the Auto Inclusion Scheme (AIS) is mandatory for Singapore employers with 6 or more employees. This also applies to employers that have received a formal “Notice to File Employment Income of Employees Electronically under the Auto-Inclusion Scheme (AIS)” from the IRAS.
If an employer is not required to submit income tax information through AIS then they must provide a hard copy of Form IR8A and any appendices applicable to inform employees about the amount of taxes that were already withheld and reported to IRAS on their behalf.
As the upcoming deadline for filing of income tax returns falls on 31 May 2020, Singapore employees can check if their company is enrolled in AIS and has submitted income tax information for YA2020 through IRAS’ AIS Organisation Search.
Which Information Must Be Sent Through the Auto Inclusion Scheme (AIS)?
There are 4 different documents that must be sent by companies as part of the required AIS submissions for employment income records. These are:
- Form IR8A – this form is used to report the total compensation received by full-time resident employees, part-time resident employees, non-resident employees (including those based overseas), company directors, board members receiving fees, pensioners, and employees who left the organization but were still compensated during the year covered by the tax return.
- Appendix 8A – this form discloses benefits-in-kind that were given to employees.
- Appendix 8B – this form is used to report any gains derived from stock option programs (ESOP) or any other form of share ownership compensation (ESOW).
- Form IR8S – this form must be submitted for any excess CPF contributions made in the past to claim refunds.
The IR8A submission deadline 2020 is March 1 and this same deadline applies to each year of assessment.
Additionally, there’s no need to deliver hard copies of IR8A to employees if the employer is in the Auto Inclusion Scheme (AIS).
Benefits of the Auto Inclusion Scheme (AIS)
- Simplifies the process of filing income taxes in Singapore for employees.
- Increases the accuracy of tax returns submitted by employees in Singapore and reduces tax evasion.
- Eliminates the need for issuing hard copies of IR8A forms for employees.
- In the future, employees will benefit from the Non-Filing Service (NFS) if their company submits income tax information through the AIS.
For Singapore employers who are new to AIS, seeking assistance from a professional accounting firm is a good option to ease tax filing and other administrative processes.
Qualified tax experts are well-versed with the various taxation schemes run by IRAS and can easily adapt to fast-changing processes and complications caused by the growing COVID-19 situation.