Conversion of Meal Coupons and Rice Subsidy into Cash

April 5, 1989 BIR RULING NO. 055-89 28 529-88 055-89 Gentlemen : This refers to BIR Ruling No. 28-000-00-529-88 dated November 7, 1988 in answer to your letter of August 17, 1988 where this Office ruled as follows: cdtech (1) That meal coupons worth P330.00 a month as well as the subsidized cost of one sack of rice a month, each employee is charged P25.00 per sack need not be included as compensation subject to withholding; (2) That uniforms of employees at an average of P2,000.00 for females and P1,000 for males once every two (2) years; and the medical cash allowance for dependents of P1,500.00 per annum given to employees are considered income/wages subject to withholding. In letter dated January 31, 1989, you requested clarification as to whether the aforesaid ruling on meal coupons and rice subsidy will still apply in the event said meal coupons and rice subsidy are converted into cash to simplify procedure and reduce administrative cost. Moreover, you are likewise requesting reconsideration of the said ruling insofar as it holds uniform allowance as well as medical cash allowance for dependents as income/wage subject to withholding on the ground that the uniforms given to your personnel are officially prescribed for easy identification and security reasons; and that the medical cash allowance for dependents is intended to promote the health, goodwill, contentment and efficiency of CB employees and their dependents. In reply thereto, please be informed that the aforementioned ruling will still apply even if the meal coupons and the rice subsidy are converted into cash. Moreover, since the uniforms given to your personnel are officially prescribed for easy identification and security reasons, the same are, therefore, not considered income/wages subject to withholding. However, insofar as the medical cash allowances for dependents are considered, the same are considered compensation income/wages subject to withholding. It is noted that under Section 2 of Revenue Regulations No. 6-82, as amended, only facilities or privileges which are of relatively small value are not considered as compensation subject to withholding. This is not so in the case of said medical cash allowance for dependents. This modifies BIR Ruling No. 28-000-00-529-88 dated November 7, 1988 insofar as the uniform allowance is concerned. Very truly yours, (SGD.) JOSE U. ONG Commissioner