MOF confirms the NS Excellence Award is taxable as it’s an incentive, not a gift

MOF confirms the NS Excellence Award is taxable as it’s an incentive, not a gift

Mothership.SG·2018-01-16 03:05

Back in Sept. 2017 we were tipped off about an issue that should concern every kilat NSman.

A Mothership.sg reader who was ranked in the top 20 per cent for his ICT was surprised when IRAS sent him a letter informing him that the NS Excellence Award (NSEA) he received was taxable, and he had to pay income tax for it.

NS Excellence Award voucher given to top-performing NSmen in ICT is taxable

After making inquiries with both IRAS and MINDEF, it seemed that the award was taxable due to its classification as a work performance incentive:

“It seems that the key distinction is that the definition of the NS Excellence Award falls under work performance, and not service excellence (ironically, given the name).

This means that any amount awarded under the NSEA will be taxable.”

Clarification needed

Under the NSEA, 

Readers were surprised, with some at the time claiming that the website for redeeming the vouchers was down. This made it harder for recipients to benefit from it, though they were still liable to be taxed.

Screen shot from Mothership.sg’s Facebook.

The case attracted the attention of Louis Ng, MP for Nee Soon GRC. On Jan. 3, he posted on Facebook that he would seek clarification in Parliament.

His question read:

“To ask the Minister for Finance what is the rationale behind the payment of tax by national servicemen on the NS Excellence Award which they obtain for good performance during in-camp training.”

Incentives are taxable

On Jan. 9, Minister for Finance Heng Swee Keat :

“The NS Excellence Award, or NSEA, is accorded to Operationally Ready National Servicemen who have performed in the top 30% of their cohort in In-Camp Training and courses during their Operationally Ready National Service. As it is an incentive to reward good performance during National Service, the NSEA, like other income from an individual’s good performance, is taxable.

However, where it is a gift from the Government to show appreciation to NSmen in general and is not a reward for good performance, the gift will not be taxable. An example is the NS50 Recognition Package.

To support and in recognition of their service to the nation, NSmen are eligible for a tax relief of between $1,500 and $5,000.”

The reply confirms that the tax is applicable because the award is classified as an incentive. It did not state what steps were taken to communicate this information to NSmen who might not be aware of the tax.

It looks like it’s still up to you to decide whether to go the extra mile and be ranked within the top 30 per cent of your cohort, if the award is to be taxed.

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Top image adapted from Cyberpioneer and MOF.gov.sg.

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Read full article on Mothership.SG

Singapore Finance Tax NS Award