Separation Pay - Tax-Exempt

January 15, 1993 BIR RULING NO. 021-93 SEPARATION PAY TAX-EXEMPT 28 (b) (7) (B) 052-92 021-93 Del Monte Philippines, Inc. Citibank Center, 8741 Paseo de Roxas Makati, Metro Manila Attention: Mr . Danilo A . Soriano Legal Officer This refers to your request for a ruling that the separation benefits to be paid to Mrs. Cirila Amper by reason of health condition be exempt from all taxes pursuant to Section 28(b)(7)(B) of the Tax Code, as amended. cdtech Documents submitted show that your employee, Mrs. Cirila Amper, was certified by your company's Attending Physician, Dr. Andrew N. Ong, to be suffering from recurring low back pains due to an old fracture of her 3rd lumbar vertebra and said employee is known to be hypertensive and asthmatic; and that said illness affects the performance of her duties and endangers her life if she continues working. Said finding is confirmed by the BIR Medical Officer. In reply, please be informed that pursuant to Section 28(b)(7)(B) of the Tax Code, as amended, any amount received by an official or employee or by her heirs from the employer as a consequence of separation of such official or employee from the service of the employer due to death, sickness or other physical disability or for any cause beyond the control of the said official or employee shall not be included in gross income and shall be exempt from taxation under Title II of the Tax Code. In view thereof, this Office is of the opinion as it hereby holds that any and all amounts which Ms. Cirila Amper will receive from you as a result of her separation from the service of your company due to her aforesaid health condition are exempt from income tax and consequently, from withholding tax prescribed by Section 72, Chapter 10, Title II of the Tax Code, as amended by B.P. Blg. 135 and implemented by Revenue Regulations No. 6-82, as amended. It is however, understood that this exemption does not include your payment of Ms. Cirila Amper's salary. aisadc JOSE U. ONG Commissioner of Internal Revenue