PAYROLL

Auto-Inclusion Scheme (AIS) for employment income

As anticipated the limit for mandatory registration for AIS has been reduced to 6 for the calendar year 2020. With the trend of the limit being reduced each year, employers should not be surprised if this becomes a mandatory requirement for all new companies with headcount in Singapore in the near future.

Below is a quick summary of what is AIS and the things that employers need to look out for. 

What is AIS

Submission of employment income for employees electronically

Under this scheme, employers submit yearly employment income information electronically to facilitate the income tax filing. The submitted information will be automatically included in the employees’ tax assessment.

Who needs to register

Employers with 6 or more employees

From the Year of Assessment (YA) 2021 (i.e. calendar year 2020 payroll), it is mandatory for employers to participate in AIS for employers:

- with 6 or more employees, or

- have received the “Notice to File Employment Income of Employees Electronically under the Auto-Inclusion Scheme”.

Other employers are encouraged to voluntarily register for AIS.  Please note that the number of employees is based on the total headcount/unique employees during the year. E.g, if you hire an employee during the calendar year 2019 and he/she leaves the firm after a month, it shall still be considered as 1 employee during the year.

This is particularly important where an employer is approaching 6 employees. The definition of employees for AIS registration purposes is wide and broadly includes any directors and anyone that you have to file a Form IR8A (Return of Employee’s Remuneration) or Form IR21 (Notification of a non-Citizen employee’s cessation of employment or departure from Singapore).

What actions to take

Registration requirement

Any employer registering for AIS for YA 2021 must complete the registration by 31 December 2020.

Benefits of registering for AIS

Automatic information population

Employee employment information would automatically be populated when they file their tax return. They do not need to include the submitted information again. This also enables the employees to verify the information and highlight any discrepancies, if any.

Paperless

Employers do not need to issue hardcopy IR8As and the supporting forms to employees.

Easier to make amendments

The online submission process makes it easier to make amendments for certain line items to the original tax return submission.

Penalties for non-compliance

Up to S$1,000

Employers who fail to comply with the AIS rules may be subject to a fine not exceeding S$1,000 and in default of payment to imprisonment for a term not exceeding 6 months.

 

How we can help

Grant Thornton Singapore’s Employe Solutions team can assist with the registration for AIS and other employment compliance requirement.
If your Company meets the statutory requirements to register for the AIS, or your company is interested to join the AIS, please contact Adrian Sham or Ruiyuan Tan for a free 30-minute consultation.