Exemption of Amount Granted to National Servicemen under NS Excellence Award from Income Tax

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.

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.