Let us take a look at the list of employees who should be included in the Auto-Inclusion Scheme for Employment Income.
Employees’ employment income is submitted to IRAS (the Inland Revenue Authority of Singapore) electronically under the Auto-Inclusion Scheme (AIS). The information should be included automatically in the employees’ online tax returns and assessments. By joining the AIS, the employment income information of the employees would be auto-included when they file their tax returns. It simplifies all the processes as it requires no manual measures. You, as an employer, must provide a statement of earnings for your employees’ reference. That would be your responsibility. You prepare all the employment income information, and your employees file their own tax returns. What would be important to note is the classes of employees which need to be included in the AIS. As defined in S68(2) of the Income Tax Act, the employment income information must be submitted by ‘all classes of persons’. This ‘all classes of person’ refers to:
- Full-time resident employees;
- Part-time resident employees;
- Non-resident employees including the ones overseas and are required to render service in Singapore during the year (excluding details of employment income where clearance has been filed);
- Company directors (including non-resident directors);
- Board members receiving Board/Committee Member Fees;
- Employees who have left the organizations but were in receipt of income in the reporting year
Everyone who is listed above must be included in the AIS. There are, however, some employees which are exceptions:
- Employees who have sought tax clearance (Form IR21)
Any employees who have sought for tax clearance are not required to submit the details of their income. They could be excluded from the list in the AIS. However, please be informed if there is any additional income for these employees, an additional IR21 is required.
- Sole proprietors and partners (unless the partners engage under an employment contract)
As they are the owners of their businesses, their salaries are taxable as trade income (any such compensation paid for work/service that is not considered wages). This means their income information is also not included in the AIS. However, there is also another exception. If the partners are considered as employees under their employment contract, which means they do not assume the liabilities of the partnership nor have a share in the profit or loss, their income information needs to be submitted via the AIS.
- Foreign employees posted overseas after clearance who did not supply employee services in Singapore for the remainder of the calendar year;
- Foreign employees based overseas and provided their employment services entirely outside Singapore for the whole calendar year;
- Foreigners who have left the company and/or country (Form IR21 required).
These are the list of employees you should include and exclude in the AIS. You can always check the IRAS for more details and updates in regards to the list. Please be informed there is also some other key information you should be aware of as an employer.
- Non-Resident Directors
The non-resident directors are not an exception for the AIS. They could only become an exception if they solely receive director’s fees.
- Employees Posted Overseas
|Remittance from Overseas Employment||Not Taxable|
|Any Excess of CPF Contribution by the Employer||Not Taxable|
|Employee’s CPF Contribution||Not Taxable|
|Overseas Posting Incidental to Singapore Employment||Taxable|
|Overseas Posting Not Incidental to Singapore Employment||Select ‘Income from Overseas Employment’:Whole Year Posting: Not required to reportPart of the Year Posting: Required to report but only the income and contribution for the Singapore employment|
- Employees Rehired within a Year
If an employee leaves their company and re-joins in the same year, the income information needs to be consolidated and submitted as one record.
- Trainees/Students on Attachment
For students who enter into an employment contract, their income information must be submitted. Otherwise, no submission is necessary.
- Foreigners or Expatriates
Submission is required for foreign and expatriate employees using the Foreign Identification Number (FIN) issued by the Ministry of Manpower (MOM) or Immigration and Checkpoint Authority (ICA).
Those are the list of employees you need to include and exclude in the AIS, along with some other important information. Paying attention to this could help you in running your business. In the meantime, we have one more thing that could help you and your business. It is Kayaroll, a payroll software that is IRAS-approved, assisting your IR8A reporting, as well as all your overall payroll system and management. We would recommend you to discover more here on our website, and if this is what you have been looking for, sign up immediately. We currently have a limited free offer for the first one hundred businesses to sign up. Managing employees is not an easy business, but payroll should not be among the challenges.