Whether Separation Pay is Subject to the Withholding Tax
BIR Ruling No. 035-91 • Bureau of Internal Revenue (BIR) Issuances • Rulings (Numbered) • Feb 25, 1991
Full text
February 25, 1991 BIR RULING NO. 035-91 28 (b) (7) (A) 000-00 035-91 S i r : This refers to your letter dated November 17, 1990 inquiring whether your separation pay is subject to the withholding tax. cdt It is represented that you are a retired officer (Senior Manager) of a private bank; that upon reaching your retirement age of 65, your services were extended for two consecutive year; that you are entitled to a retirement pay but that you have not claimed your retirement benefit because you want to know whether such benefit is subject to the withholding tax or exempt from it. In reply, please be informed that the retirement plan of your company must be determined by this Office as a reasonable retirement benefit plan within the contemplation of Republic Act No. 4917 [now Section 28(b) (7) (A) of the Tax Code]. Otherwise, the benefit you received upon your retirement at age 65 shall not be exempt from income tax and therefore, subject to the withholding tax prescribed by Section 71, Chapter X, Title II of the Tax Code, as amended by Batas Pambansa Blg. 135 and implemented by Revenue Regulations No. 6-82 as amended. cdtech Very truly yours, (SGD.) JOSE U. ONG Commissioner
Ask what this means for your situation
The assistant quotes the passage it relies on and links the source, so you can check every figure it gives you.