Deductibility of the Contribution Made to the Pension Fund

April 3, 1959 BIR RULING NO. 159-59 The Philippine Acetylene Co. 1155 Cristobal, Paco Manila Gentlemen : This has reference to your letter dated March 12, 1959, requesting ruling on the query below: You proposed to establish a pension plan and its members are your employees. Your employees will contribute 5% of their annual salary to the pension fund and an equivalent amount will be put by you. The total amount contributed to the pension fund will be invested in the FMF shares. In the event of retirement, death or separation from the service, the members will accumulate for their benefits the value of the FMF shares corresponding to the amount contributed by him/her to the fund plus the dividends and the value of the shares corresponding to the amount contributed by you subject only to certain rules. The question now is whether or not the contribution made by you to the pension fund is deductible in your income tax return. In reply thereto, I have the honor to inform you that the amount contributed by you to the pension fund during the taxable year is deductible. However, if any portion of the funds of the plan should revert to your possession, ownership or control as employer by reason of the termination of the plan or dissolution, the amount so reverted shall be returned by you as income in the taxable year of reversion. cdt Very truly yours, (SGD.) JOSE ARAAS Commissioner of Internal Revenue