BIR Ruling [DA-186-97]

April 17, 1997 BIR RULING [DA-186-97] Bank of the Philippine Islands BPI Building, Ayala Avenue cor. Paseo de Roxas, Makati City Attention: Mr. Efren H. Tuble Senior Manager Gentlemen : This refers to your letter dated December 20, 1996, requesting for an opinion on the tax treatment of the monthly financial assistance being given by the Bank of Philippine Islands to its rank-and file employees pursuant to its Collective Bargaining Agreement signed last September 6, 1996. It is represented that the financial assistance amounts to P325.00 monthly, being utilized primarily by the employees for the purchase of rice and that this new allowance is separate and distinct from the Monthly Cost of Living Allowance which has long been subject to withholding tax. In reply thereto please be informed that under Section 28 (b) (8) of the Tax Code, as amended by R.A. No. 7833, other benefits such as productivity incentives, christmas bonus, etc., in an amount not exceeding P12,000.00 which shall be integrated in the 13th month pay is excluded from the computation of gross compensation income. Such being the case, monthly financial assistance in the amount of P325.00 may form part of "other benefits" of the employees provided it is within the limitations of P12,000.00 for other benefits and within the total of P30,000.00 inclusive of the 13th month pay. (BIR Ruling No. 135-95 dated September 6, 1995). This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, it will be disclosed that the facts are different, the this ruling shall be considered null and void. Very truly yours, (SGD.) ALICIA L. TOMACRUZ Head, Revenue Executive Assistant (Legal Service)