Exemption of Amount Granted to National Servicemen under NS Excellence Award from Income Tax
Ministry of DefenceSpeakers
Summary
This question concerns the tax status of the NS Excellence Award (NSEA) and the total amounts granted to Operationally Ready National Servicemen between 2017 and 2021. Mr Chua Kheng Wee Louis inquired about the income tax collected from these payments and whether such performance-based rewards could be made tax-exempt. Minister for Defence Dr Ng Eng Hen explained that the NSEA is taxable as employment income, unlike government appreciation gifts, though only higher earners are effectively taxed. He noted that specific tax amounts vary by individual, while total payouts recently decreased due to the scaling down of activities during the pandemic. Finally, he highlighted that all National Servicemen receive annual tax reliefs of $1,500 to $5,000 as recognition for their service.
Transcript
7 Mr Chua Kheng Wee Louis asked the Minister for Defence (a) for each of the last five years, what is the amount granted to Operationally Ready National Servicemen under the NS Excellence Award (NSEA); (b) what is the amount of personal income tax clawed back from NSEA payments; and (c) whether such a reward for good performance can be tax-exempt, in line with NS recognition awards.
Dr Ng Eng Hen: The NS Excellence Award (NSEA) recognises excellent performance by Operationally Ready National Servicemen (NSmen) during In-Camp Training or National Service (NS) training courses. The table below shows the total amount awarded to NSmen under the NSEA from 2017 to 2021. The amounts were lower in 2020 and 2021 due to the scaling down of NSmen activities during the COVID-19 pandemic.
Based on our taxation policies, payments which are gifts from the Government to express appreciation for NSmen, such as the NS55 Recognition Package, are not taxable. Monetary incentives and awards tied to performance during NS such as the NSEA are taxable, as they are treated similarly to employment income. However, all NSmen are also eligible for a tax relief of between $1,500 and $5,000 each assessment year as a recognition of their service.
As the personal income tax payable by each individual varies depending on multiple factors including overall assessable income, personal reliefs including NSmen relief and marginal income tax rate, we are unable to determine the amount of personal income tax paid by NSmen that is specific to the NSEA. However, in effect, only those who earn higher incomes are taxed for their NSEA.