One of our employees completed a qualification relevant to his job. The course fee was paid by the employer. The employer would like to give the employee an award for passing his exam. Is this payment taxable?
The payment of an award to an employee on passing an exam will not give rise to a tax liability provided the award can reasonably be regarded as a reimbursement of expenses likely to have been incurred by the employee in studying for the qualification or sitting the examination (e.g. travel costs, exam fees, manuals or other reading material, stationery, etc.), and the qualification is relevant to his employment. The award is fully taxable where these criteria are not satisfied.