End of service benefits and ex-gratia are taxable - KNUST tells retired staff

Management of the Kwame Nkrumah University of Science and Technology have stated that the 25% deductions being made from the ex-gratia of its retired staff is lawful.

This follows an earlier news report which indicated that some 150 pensioners from a group made of the 2019/2020 ex-staff of KNUST raised red flags over what they describe as “deliberate and inhuman deduction aimed at extorting them to aggravate their existing sufferings.”

In a press release issued by Deputy Registrar Dr Daniel Norris Bekoe, KNUST stated that the deduction of 25% tax on the end of service benefit for senior members is valid and in accordance with article 896 of the Income Tax Act issued on October 6, 2016.

“Management wishes to state that the deduction of 25% tax on the end of service benefit for senior staffs members, 17.5% for senior staff and 10% for junior staff follows the new Income Tax Act, 2015 (Act 896) issued on October 6, 2016, by the Republic of Ghana.

Specifically, section 4.6.4 states that: “End of services benefits and ex-gratia paid either in cash or in-kind is taxable,” it added.

It further stated that “it communicated extensively to the 2019/2020 retirees and copies of the new Income Tax Act made available to the leadership of the group.

"It is also worthy to note that this tax applies to all staff of all public universities in Ghana who qualify for such packages, the deductions is thus not unlawful, or discriminatory.”

Meanwhile, in an earlier statement read on their behalf by the chairman, Ako-Nnubeng Philip Barimaba, the aggrieved ex-staff implored the authorities of KNUST and all stakeholders to stop any further deductions and refund all illegally deducted amounts without any delay.

“What makes us more furious is that an internal memo issued by the university to us was unscripted, saying the amount given to us was a ‘gift’ but not an ‘ex gratia, as it has been in many years,” they said.

Read the full response of KNUST to the aggrieved ex-staff below: