Taxability of the Amount Received by Employees Representing the Cash Equivalent of Unused Sick Leave Credits

May 29, 1992 BIR RULING NO. 180-92 29 103-92 180-92 Philips Electronics & Lighting, Inc. Philips House, 106 Valero Street, Salcedo Village, Makati, Metro Manila Attention: Mr . Ariston T . Mitra Asst . Vice President Gentlemen : This refers to your letter dated 30 March 1992 requesting a ruling as to whether the amount received by your employees representing the cash equivalent of unused sick leave credits are subject to income and withholding taxes. In reply, please be informed that since monetization of leave credits is the payment of the money value of the accumulated vacation leave credits without actually going on leave of absence, the monetization of leave credits shall not therefore apply to sick leave credits because the employee who avails of the sick leave credits has to go on sick leave. (BIR Ruling No. 99-92) In view thereof, this Office is of the opinion as it hereby holds that the cash equivalent of unused sick leave credits received by your employees are subject to income tax and consequently to the withholding tax on wages. Very truly yours, JOSE U. ONG Commissioner of Internal Revenue