The Auto Inclusion Scheme, or AIS as it is more commonly called, was introduced to simplify the way employment income is reported for tax purposes in Singapore. Instead of leaving each employee to manually key in details of their salaries, bonuses, and benefits, the scheme shifts this responsibility to the employer. Under AIS, companies electronically transmit employees’ income information directly to the Inland Revenue Authority of Singapore (IRAS).
The logic behind this is straightforward. Since employers already maintain payroll records, why not let them provide the information to IRAS in one go? That way, tax returns for employees can be automatically populated with accurate numbers. Employees simply need to check the pre-filled data rather than worry about mistakes or missing items. In practice, this makes the annual filing process faster, less prone to error, and overall, more reliable.
By streamlining how employment income reaches IRAS, AIS is both a compliance tool and an efficiency booster. For employees, it cuts down on filing burdens. For employers, it ensures consistency. And for IRAS, it enhances data accuracy, which benefits the system as a whole.
Participation for AIS
From the Year of Assessment (YA) 2022 onwards, AIS is no longer optional for many employers. Any business with five or more employees must participate. The definition of “employee” here is wide. It includes:
- Full-time resident staff
- Part-time employees
- Non-resident employees who might even be based overseas but provided services in Singapore during the year
- Company directors, including those who are non-residents
- Board or committee members who are compensated with fees
- Pensioners receiving ongoing payments
- Employees who have since left but earned income in the reporting year
Even if an employer has fewer than five staff, the scheme does not exclude them. Instead, IRAS encourages voluntary participation. Smaller employers who opt in benefit from the same efficiency and risk reduction as larger ones.
Another important trigger for compulsory participation is receiving a Notice to File Employment Income Electronically under AIS. If IRAS issues this notice, the employer has no choice — they must register and comply with AIS requirements.
For AIS purposes, “employee” also extends beyond traditional staff. It covers anyone for whom a Form IR8A (reporting of remuneration) or a Form IR21 (notification of cessation or departure of a non-Singaporean employee) must be submitted. In other words, if remuneration is reportable, that person falls under AIS.
Forms filing for AIS
Participation in AIS comes with specific filing obligations. Employers registering under AIS must prepare and submit four types of forms. At the heart of it all is Form IR8A, which is compulsory. The other three act as appendices or supplements, depending on the circumstances.
- Form IR8A: The central document, this form captures the full compensation paid to staff. It applies to full-time and part-time resident employees, non-residents, company directors, board members, and pensioners.
- Form IR8S: Used to report excess CPF contributions made in earlier years when employers seek refunds.
- Appendix 8A: Records benefits-in-kind such as housing allowances, accommodation, company car usage, and other non-cash benefits provided to employees.
- Appendix 8B: Covers share-related compensation, including gains from employee stock option plans (ESOP) or other employee share ownership (ESOW) arrangements.
While Form IR8A is always mandatory, the other three only apply if the employer provides the relevant benefits or payments. Together, these forms give IRAS a complete view of employment income across cash, CPF contributions, and non-cash elements.
To make compliance easier, IRAS has teamed up with payroll software providers. Employers using compatible payroll systems can generate and transmit AIS forms seamlessly, avoiding manual errors and ensuring timely submission. For businesses already digitalising their payroll, this integration smooths the process significantly.
Requirements for filing AIS
Deadlines are strict under AIS. Employers must file employees’ income information electronically between 6 January and 1 March each year. This ensures IRAS has the data ready in time to populate employee tax returns.
For companies not in AIS, the alternative is more traditional. They must still provide employees with hardcopy Form IR8A (and appendices, if relevant) by 1 March. Employees then use these documents to manually file their own income tax returns.
The stakes are high for non-compliance. Failing to file under AIS can lead to penalties of up to SGD 5,000. If the penalty itself is not paid, imprisonment of up to six months can follow. Clearly, IRAS takes the scheme seriously.
The message is consistent: even employers with fewer than five staff should participate. Voluntary participation reduces risks, avoids the stress of paper forms, and ensures companies stay aligned with best practices.
Final Thoughts
AIS filing is not just about ticking a box for IRAS. It is about creating a smoother, more reliable tax environment for everyone involved — the authority, the employers, and the employees.
For employers, the scheme means more responsibility, but also fewer disputes about income reporting. For employees, it reduces anxiety during tax season because numbers arrive pre-filled. For IRAS, it enhances compliance without increasing administrative burden.
The rules are clear. If you have five or more employees, AIS is mandatory. If you have fewer, it is still worth considering. The penalties for non-compliance are significant, but beyond penalties, the bigger picture is efficiency. A streamlined system saves time for businesses and ensures employees get it right the first time.
In today’s environment, where regulators emphasise digital compliance, AIS is not just a requirement but a step forward in modernising tax administration. Businesses that adopt it voluntarily signal responsibility and foresight. And those required to adopt it should see it not as a burden, but as part of professional governance.
At the end of the day, AIS is one of those changes that feels demanding initially but pays off in the long run. It reduces paperwork, strengthens compliance, and, most importantly, makes tax filing easier for employees.
