Understanding Singapore's Auto-Inclusion Scheme (AIS) for Employment Income

The Auto-Inclusion Scheme (AIS) is an initiative by the Inland Revenue Authority of Singapore (IRAS) that requires employers to electronically submit their employees’ income information. This system simplifies the tax filing process for employees, as their income details are pre-filled in their tax returns, reducing the need for manual entry and minimizing errors.

Key Features of AIS:

• Electronic Submission: Employers compile and submit employment income data via AIS-compatible software by March 1 each year. IRAS then incorporates this information into employees’ tax returns.

• Elimination of Hardcopy Forms: With AIS, employers are no longer required to provide physical IR8A forms or supporting documents to employees. Instead, they may offer a statement of earnings or a copy of the IR8A for reference.

• Simplified Tax Filing: Employees benefit from a more straightforward tax filing experience, as their employment income information is already included in their returns. This system also positions them for potential eligibility in the No-Filing Service in the future.

Mandatory Participation:

Starting from the Year of Assessment (YA) 2024, participation in AIS is compulsory for employers with five or more employees, including:

• Full-time and part-time resident employees
• Non-resident employees providing services in Singapore
• Company directors (both resident and non-resident)
• Board members receiving fees
• Pensioners
• Employees who left the organization but received income during the reporting year (e.g., stock option gains)

Employers who have received a “Notice to File Employment Income of Employees Electronically under the Auto-Inclusion Scheme (AIS)” are also required to participate.

Important Considerations for Employers:

• Tax Clearance (Form IR21): For foreign employees who have terminated their employment and undergone tax clearance, employers are not required to provide income details unless additional earnings have not been disclosed.

• Sole Proprietors and Partners: Income derived from their businesses should be excluded from AIS submissions. However, salaried partners under an employment contract are considered employees, and their income should be reported through AIS.

• Non-Resident Directors: Employers must report employment income details for all employees, including non-resident directors. If a non-resident director only receives director’s fees, their information is not required to be submitted.

• Rehired Employees: If an employee leaves and rejoins within the same year, employers should consolidate their employment income information and submit it as a single record.

• Interns and Trainees: Employment income for students under an employment contract in Singapore should be reported. Allowances intended solely for daily expenses, board, and lodging, as part of a compulsory educational program attachment, are exempt from submission.

• Foreigners and Expatriates: Employers must report income for foreign and expatriate employees who receive income for services rendered in Singapore. The Foreign Identification Number (FIN) issued by the Ministry of Manpower (MOM) or the Immigration and Checkpoint Authority (ICA) should be included in AIS submissions.

Registration Timeline:

While registration for AIS for YA 2024 has closed, employers can register for YA 2025 from April 1, 2024, to December 31, 2024.

By adhering to AIS requirements, employers contribute to a more efficient and accurate tax filing system, benefiting both their organizations and employees.

For more detailed information, refer to the IRAS website.