Exemption from Income Tax - Qualified Pension Plan

January 31, 1990 BIR RULING NO. 010-90 50 (b) 000-00 010-90 Gentlemen : This refers to your letter dated January 12, 1990 requesting confirmation of your opinion to the effect that the "pension funds" referred to in Revenue Regulations No. 12-89 whose sale of real property other than capital assets are subject to a creditable withholding tax refers only to non-qualified pension plans, i.e., those not approved by and registered with the BIR in accordance with Revenue Regulations No. I-68 as amended. aisadc In reply thereto, please be informed that your opinion is hereby confirmed. Pursuant to Section 53(b) of the Tax Code, as amended, income of trust fund from its investments are exempt from income tax except interest and/or yield on its deposit substitute instruments and interest on its savings and time deposits paid or accrued beginning August 1, 1986 which are subject to the 20% final tax pursuant to Section 21(c)(I) in relation to Section 50(a) both of the Tax Code. This Office has ruled that gains derived from the sale of real property owned by a qualified pension plan is not taxable. (BIR Ruling No. 126-89) Accordingly, any gain that may be realized by a qualified pension plan i.e., those plans which are duly registered with the BIR under Revenue Regulations No. 1-68 as amended by Revenue Regulations No. 1-83 from the sale of their real property is exempt from income tax and consequently from the expanded withholding tax under Revenue Regulations No. 12-89 as amended by Revenue Regulations No. 1-90. cd Very truly yours, (SGD.) JOSE U. ONG Commissioner