Auto-Inclusion Scheme (AIS): Simpler Way to Report Employee Earnings
The Auto-Inclusion Scheme (AIS) is a digital tax solution in Singapore that simplifies reporting employees' earnings. Enforced by the Inland Revenue Authority of Singapore (IRAS), AIS allows employers to submit income details online, saving time and reducing manual errors. Companies like NTUC FairPrice, for example, benefit from AIS as it streamlines income reporting for all employees, including directors and retirees. In this article, we'll cover who needs to participate, how to register, and what information employers must submit.
Who Needs to Participate in the Auto-Inclusion Scheme?
From the Year of Assessment (YA) 2022, participation in the AIS is mandatory for employers with 5 or more employees. This includes:
- Full-time resident employees
- Part-time resident employees
- Non-resident employees (even those overseas but who provided services in Singapore)
- Company directors (including non-resident directors)
- Board members receiving Board or Committee fees
- Pensioners
- Employees who have left the company but received income in the reporting year (e.g., stock option gains)
Let’s say a well-known company like NTUC FairPrice has over 100 staff members, including its board of directors and retirees who still receive pensions. Under AIS, NTUC FairPrice must electronically submit income details for all employees. Even a retired staff member who received stock gains in the year must be included in the submission.
For employers with fewer than 5 employees, AIS participation is voluntary, though highly encouraged for ease of tax reporting.
How to Register for AIS
Registering for the AIS is straightforward, and IRAS provides step-by-step methods for personal tax filers, businesses, and tax agents.
Personal Tax (via Singpass):
- Log in using your Singpass.
- Select ‘More’ and choose ‘Register for AIS’.
- Enter your organisation’s UEN and tax reference number.
- Complete the registration details and click ‘Register’.
Business Tax (Existing Approver/Preparer Role):
- Log in using your UEN/Entity ID and Singpass.
- Go to ‘Employers’ and select ‘Register for AIS’.
- Complete the registration and submit.
For Tax Agents (vis Business Client):
- Log in using your company’s UEN and Singpass.
- Select ‘Register for AIS’ and input your client’s UEN type and tax reference number.
- Complete the registration details and submit.
For all processes, IRAS ensures a simple online registration experience, enabling businesses to comply efficiently.
What Information Needs to be Submitted for AIS?
Employers must prepare and submit the following forms by 1 March every year, as required under Section 68(2) of the Income Tax Act:
Form IR8A: Mandatory for all employees, including full-time, part-time, non-residents, directors, board members, pensioners, and ex-employees who received income in the reporting year.
Appendix 8A: For employees who were provided with benefits-in-kind.
Appendix 8B: For employees with gains from Employee Stock Option Plans (ESOP) or Employee Share Ownership Plans (ESOW).
Form IR8S: To report excess CPF contributions or request refunds.
If NTUC FairPrice rewarded its employees with company shares under an ESOP plan in 2024, Appendix 8B must be submitted to IRAS alongside each employee’s IR8A form. Similarly, if there were CPF contributions exceeding the required amount, the IR8S form would also need to be included.
How Does AIS Benefit Employees and Employers?
The AIS offers several advantages that make tax reporting easier and more efficient for both parties:
- For Employees: No need to manually declare employment income, saving time and simplifying tax filing.
- For Employers: Submit employment income information directly to IRAS, removing the need to issue individual payment summaries to employees.
- Improved Accuracy: With less manual data entry, the chances of errors in tax returns are significantly reduced.
- Faster Processing: Employment income is auto-included, leading to quicker tax return processing for employees.
So if a large company like NTUC FairPrice no longer needs to spend countless hours issuing manual tax summaries. Employees can enjoy a hassle-free tax filing experience, knowing their income has already been accurately submitted.
Final Thoughts
The Auto-Inclusion Scheme (AIS) transforms a tedious process into a seamless, digital solution for employers in Singapore. Whether you run a global enterprise or a growing local business, AIS ensures your employees’ income details are reported accurately and efficiently. Missing deadlines or failing to comply with AIS requirements can lead to unnecessary headaches and penalties.
If managing AIS feels overwhelming, Accounting Superhero is here to help. Our professional team ensures your AIS submissions are prepared, filed, and compliant, so you can focus on growing your business stress-free. Let us handle the numbers, while you take care of what matters most.