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How Does the IRAS Auto-Inclusion Scheme Affect Businesses?

In Singapore, approximately 96% of taxpayers file their income tax returns timely. At the same time, they look for a more efficient tax system that can make the entire process more streamlined. For businesses, one of the best ways to ensure this is through the Auto-Inclusion Scheme (AIS).

Under this scheme, employers are required to provide complete information about the income of their employees to the Inland Revenue Service of Singapore (IRAS). This makes it simpler for employees to file their tax returns every year, accurately and efficiently.  

So, how does this affect your business? Let’s understand here.

What is the Auto-Inclusion Scheme?

According to IRAS Auto-Inclusion Scheme, employers must submit information of their employees’ employment income to the IRAS electronically. The IRAS will then include this data in the employees’ tax returns and assessment files online. The following employees must be included in the AIS:

  • Full-time and part-time resident employees
  • Non-resident employees
  • Board members and company directors
  • Employees who have exited the organisation but received income in the AIS reporting year
  • Pensioners

How Will IRAS Auto-Inclusion Scheme Affect My Business?

To understand how AIS will affect your business, you have to first determine whether your business is subject to the scheme. If your company has eight or more employees, it is compulsory to sign up for the scheme. Failure to adhere to AIS compliances may result in penalties up to $1,000.

For the employer, the IRAS Auto-Inclusion Scheme has ongoing benefits. Once you sign up for the scheme, you do not require issuing a hard copy of IR8A or supporting forms for the employees to file their tax returns. Everything will automatically get updated in the employees’ tax returns and assessment files. You only need to provide them with a copy of the IR8A or the statement of income for reference.

Additionally, signing up for the Auto-Inclusion Scheme allows your business to stay compliant with IRAS requirements. And the advantages of offering your employees a streamlined tax system cannot be overlooked.

However, you need to choose payroll software that aids in a seamless integration of IRAS into the system. PeopleCentral is a comprehensive and fully automated payroll administration platform that supports automated incorporation and calculation of IRAS Auto-Inclusion Scheme for fast and simple payroll processing. 

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