Guide to IRAS' Auto-Inclusion Scheme - What It Means for Income Tax

The Inland Revenue Authority of Singapore (IRAS) introduced the Auto-Inclusion Scheme (AIS) in 2018 to simplify employee income tax filing. With Neeyamo now listed as a category A AIS payroll software vendor, let us take a look at everything you need to know about AIS, from its significance, what it means to comply with it, who needs to register, and a whole lot more.

What is AIS?

This scheme automatically includes employees' employment income information in their income tax returns. It was designed to simplify and streamline the employee tax filing process while improving efficiency and reducing administrative burdens for employees and employers.

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What is the difference between AIS and TIS?

In addition to AIS, IRAS also offers the Taxpayer Information Summary (TIS) to simplify filing. While both AIS and TIS provide third-party income data to pre-fill tax returns, TIS has a wider scope.

• TIS includes employment, freelance, rental, dividend, interest and other income types.
• AIS currently only covers employment income from large companies and high-value freelance earnings.

So, while AIS gives a snapshot of earnings from major sources, TIS aims to provide more complete income information across all taxable categories. This gives filers a fuller financial picture for reporting.

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How does AIS benefit employees and employers?

• Employees don't have to manually declare employment income, saving time and simplifying tax filing.
• Employers submit employment income information directly to IRAS, removing the need to issue employee payment summaries.
• Increased accuracy of tax returns as there is less manual data entry required. 
• Faster processing of tax returns since employment income is auto-included.

Understanding AIS Categories

Having the right payroll provider is critical to ensure employees and employers make the most of AIS. With the right payroll software vendor, integrating with the IRAS' API specifications allows for automated submission of payroll data.

IRAS supports four main form types.

• IR8A - Employee income tax form
• IR8S - Supplemental employee income tax form
• A8A - Contributions and donations received by approved IPCs
• A8B - Donations received by approved IPCs

Payroll software vendors are categorized by their compliance with a "List of Recommended Controls for Payroll Software" published by the IRAS. They are organized into A, B, or C, depending on their compliance with the 24 controls listed under "should have" and "good to have", broadly classified into six different control types that indicate the software's security and controls.

• Category A: Fully complies with all 24 controls
• Category B: Complies with 10 basic controls
• Category C: Does not comply with the controls

Complete Control: Payroll Systems with Full AIS Compliance

Category A represents the highest bar with the most stringent requirements and is therefore considered the lowest risk provider for AIS participation. It ensures maximum protection of employee's personal and income data and is subject to full audits and oversight by IRAS.

Given the extensive time and resources required, only a few large global payroll providers like Neeyamo meet Category A criteria. It reflects the significant investment and commitment to complying with the highest data standards.

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Who should register for AIS?

Registration for AIS is only required for:

• Employers with over 200 employees on payroll
• Businesses paying out freelance work fees exceeding $10,000 annually 

You don't have to register as an individual employee or freelancer for AIS. Your participation is based on whether your income sources, like your employer, have enrolled with IRAS and provide data.

Is AIS Mandatory for Income Tax Filing?

While AIS is not mandatory for employees, participating can simplify tax filing. Under AIS, IRAS automatically obtains your income and tax payment data from participating employers and organizations. This information is used to pre-fill parts of your income tax return.

So AIS can streamline filing by automatically including your employment income details. However, AIS may not cover all taxable income sources. Employees may still need to provide additional earnings statements for income outside of AIS.

It's important to review your AIS statement from IRAS. But you should also gather other income records as needed for filing an accurate return. Treat the AIS statement as a helpful supplement, but not a total solution for completing your taxes. Refer to AIS for employment income while collecting documentation on other untaxed earnings..

How do I get my AIS statement from income tax?

If your employer participates in AIS, you'll receive an AIS statement summarizing your income details. This is usually sent out digitally in March or April before tax season. 

Check your SingPass inbox regularly for digital AIS statements from IRAS. If you receive paper statements, watch your mailbox during this period. These statements contain the employment and freelance income data IRAS has received under AIS to pre-fill your return.

Review your AIS statement and supplement it with any further income evidence you may need when filing.

How do I download AIS from income tax portal?

If you need help finding the AIS statement sent by IRAS, you can access and download it through the myTax Portal. Log into the portal and visit Notices > Income Tax > AIS Statement for Individuals.

Here, you can view and save current and past AIS statements. Having these on hand can make referencing your income data easier when filing your tax return.

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AIS: Streamlining Tax Compliance

The Auto-Inclusion Scheme represents a significant step forward in streamlining and automating tax filing for employees in Singapore.

With the help of Category A payroll software vendors like Neeyamo, companies can easily provide accurate employee income details to IRAS annually. For employees, the pre-filled tax returns reduce filing efforts and errors.

Overall, AIS increases efficiency, convenience and compliance for all parties involved in the employee income tax process.