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If you have a company in Singapore, you can’t get around preparing IR8A forms for your employee wages and other related documents and submitting them to the IRAS. But many entrepreneurs are either not aware that they are supposed to do this or are not sure how to go about doing it.
What is IR8A?
The term “IR8A” describes the process of filing an employee's wage and tax returns. It’s a legally required practice for all firms in Singapore and one of the most crucial aspects of a business's financial management. The IR8A process includes filing the employee's wage and tax reports, as well as setting a company's payroll. This ensures compliance of wages and taxes with the rules, regulations, and laws of the country.
The IR8A form is a standard tax form for reporting income, deductions, and exemptions. Section 68(2) of the Income Tax Act says that all Singaporean employers must give their Singaporean employees a filled-out IR8A form that has all the information about their earnings.
The form includes the gross income of Singaporean employees and employers, their allowances and benefits (including long-term gratuities). However, you don’t have to take on the gargantuan task of filling out and submitting the IR8A forms for all your employees. Fortunately, the IRAS doesn’t mandate that.
You only have to provide your employees with the IR8A forms, which they will fill out themselves, and submit the forms to the IRAS.
It's possible that you'll also need to fill out Form IR8S and Appendices 8A and 8B, depending on the specifics of your company's workplace. These additional forms determine if your company is providing adequate housing, food, healthcare, and other benefits to your employees.
What are Appendix 8A, Appendix 8B, and Form IR8S?
Appendix 8A, Appendix 8B, and Form IR8S are all documents for employees to register as residents or non-residents in Singapore. Employers distribute these forms to their employees at the beginning of each year along with Form IR8A to report their earnings for the previous year.
Appendix 8A is a form for individuals who are Singaporean employees. The purpose of this form is to declare any “in-kind” or “non-cash” benefits outside their salaries. This includes everything from accommodations, meals, and transportation to gyms and memberships.
All business owners have to declare “in-kind” benefits and the perks they offer, unless they are tax-exempt.
This is another form that only applies to Singaporean employees. If you have employees who stand to benefit from Employee Stock Option Plans (ESOPs) or any other form of Employee Share Ownership (ESOW) plans, you must submit these forms on their behalf. If an employee has ESOP or ESOW plans, it means they can buy or own company stock. Any profits or gains derived from the stock option must be taxed.
If you paid too much into the Central Provident Fund (CPF) on your employees' salaries and want to get your money back, you need to fill out Form IR8S. The same is true for a person who has made excess contributions to their CPF account. If you intend to claim the refund on such contributions, you must complete Form IR8S.
The IRAS requires you to submit all four forms by March 1 every year.
Who does the employer prepare the IR8A for?
Every employer must complete an IR8A form for each of their employees, which includes:
● All owners and managers of local businesses
● Non-resident corporate directors
● Board members who are paid as committee members
● Singaporeans or permanent residents who work full-time or part-time
● Employees who are not citizens of the country but worked in Singapore during the fiscal year.
● Employees who received a pension while working for the company.
● Employees who left the company but are still owed money from the previous year.
Does the IR8A apply to all employees?
The IR8A applies to all the following employees:
- Full-time resident employee
- Part-time resident employee
- Employees who are not Singapore residents, such as those who are based abroad but whose duties require them to perform services in Singapore at some point during the year. IR8A lets you omit their employment income information from returns where clearance has been filed.
- Company director (including a non-resident director)
- Board members receiving Board/Committee Member Fees
- Former employee who received payment in 2022 despite leaving their position.
Who is Exempted from IR8A Filing?
The IRAS has made some provisions that exempt some people from filing IR8A forms. These include:
● Foreign workers who were cleared to work in Singapore but didn't do their jobs in the country for the whole year.
● Employees who lived and worked outside of Singapore for the whole year and did all of their work outside of Singapore.
● Employees who left the company as well as the country. Companies need to submit Form IR21 in this case.
● Non-executive directors who are not considered to be employees. So employers who take part in AIS (Auto Inclusion Scheme) must let them know that they need to report their income separately on their tax returns.
What is AIS?
The primary goal of the Auto Inclusion Scheme, or AIS, is to offer convenience for employees in Singapore while calculating and filing for their annual income and tax returns.
The Auto-Inclusion Scheme (AIS) by IRAS allows you to electronically submit the IR8A information for employment income. The AIS system automatically processes this information, approves it, and sends it back to you with all the details filled in on the IR8A forms. Using the system is optional for businesses with five or fewer employees. But if you have more than 5 employees, you must use AIS to file the IR8A form.
Both the employer and the employee benefit from the data's automatic incorporation into the employee's income tax assessment. We also advise that you provide a copy of each employee's IR8A form so that they have one for their records.
Step-by-Step Process of Submitting IR8A to IRAS
1. Join the Auto Inclusion Scheme (AIS)
To register your business for AIS, head over to myTaxPortal. We always recommend every business owner register for AIS, regardless of the number of employees they have. The process of registering for AIS is simple, and all you need is the UEN (Unique Entity Number) of your business or your SingPass.
2. Link your CPF data with AIS
Linking the CPF data of your employees with AIS makes the following process of AIS submission simple and straightforward. You are effectively authorizing IRAS to fetch employment income and CPF data from the CPF Board. IRAS will fetch the salary details of your employees and pre-fill the details when you are submitting Employment Income Records into AIS.
To link your CPF data with AIS:
- Register for linking CPF data at 'CPF Data Link-up Service' section on myTaxPortal.
- Connect your payroll system to AIS.
- Move the CPF data of your employees into AIS.
- Create an employer submission form in AIS and submit the form with your CPF details.
3. Prepare Employment Income Records for Submission
Ensure that all your documents and records are in order before submission. There are some things you should remember when doing this:
● If you are the sole proprietor or one of the partners, your salaries get taxed as trade incomes as you own the company either in full or in part. As such, your income information is excluded from AIS.
● If you have one or more non-resident directors, you must also include their income information when submitting to AIS.
● If you have an employee who left and rejoined your company during the same year, you will need to consolidate their income records to reflect this.
● If your company has employed trainees, you must also include their income information in AIS — only if they have been in an employment contract with your company. If you have only given these trainees allowance in the form of commuting, outstation traveling, and meals, you don’t have to include this information in AIS.
● You have to submit income information on any foreign employees who are on your payroll, regardless of how long they were employed or the amount you paid to them in terms of remuneration.
4. Report Employee Earnings
The law requires you to report your employee earnings by March 1 every year. You have to prepare and file the IR8A form, Form IR8S wherever applicable, Appendix 8A, and Appendix 8B. All this is done electronically because you have registered for AIS. There are no hard copies involved, and the AIS system will pre-fill all the data in your employees’ electronic Income Tax Returns.
5. Submit Employment Income Records
The IRAS allows for several ways of submitting employment income records.
● Submit directly at myTaxPortal.
● You can also submit via the Provident and Tax (PAT) system.
● IRAS works with payroll software vendors to help employers submit employment income information. To easily submit records to IRAS, you can use payroll software integrated with the AIS Application Programming Interface (API) Service from AIS payroll software vendors.
Can I Amend It After the Submission?
We always recommend crossing all your t’s and dotting all your i’s before submitting your income records into the system. However, something may have slipped through the cracks. If you find there are errors in employee ID, income deductions, or other fields, you must submit amendment files immediately.
You will have to run through the same process of submitting records that you originally followed. But this time:
● You only include income records of the affected employees
● Mention the difference in amounts, if any.
● Only fill up the fields of information that you want to change.
● If amendments to IR8S, Appendix 8A, and Appendix 8B affect the figures in the IR8A form, you will also need to submit an IR8A amendment file.
If you wish to change any identity or demographic details of an employee, such as date of birth, nationality, etc., you can fire off a simple email to myTax Mail to make the changes.
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You can read about the right way to calculate your income tax here, or you can check out our blog to go through some useful resources.