Interest Income or Other Monetary Benefit from Trust Investments Not Subject to Capital Gains Tax But to 15% Final Tax

October 17, 1985 BIR RULING NO. 184-85 21 (d) 000-00 184-85 M a d a m : This refers to your letter dated September 27, 1985 stating that you are a holder of four (4) Land Investment Trust Certificates (LITC Nos. 06626, 00627, 00628 and 00629) worth Fifty Thousand Pesos (P50,000.00) each, or a total of Two Hundred Thousand (P200,000) Pesos, issued on November 12, 1982, by the Home Financing Corporation (HFC), as trustee, in connection with its LIT G. Araneta Townhouse Project, that the said LITCs matured last May 11, 1985, and that at your request, HFC will redeem the same at par value of P200,000 also. On the basis thereof, you now request for issuance of a certification of exemption from capital gains tax, which you are required to submit to the HFC. In reply thereto, please be informed that Section 21(d) of the Tax Code, as amended by P.D. No. 1959, provides as follows: "(d) On interest from bank deposit and yield or any other monetary benefit substitute and from trust fund and similar arrangements . Interest from Philippine Currency Bank deposits and yield or any other monetary benefit from deposit substitutes and from trust fund and similar arrangements whether received by citizens of the Philippines or by resident alien individuals, shall be subject to a 15% final tax to be collected and paid as provided in Sections 53 and 54 of this Code." Such being the case, interest income or other monetary benefit from trust investments are not subject to the capital gains tax, but to the final tax of 15% prescribed by Section 21(d) of the Tax Code, as amended by P.D. 1959. Accordingly, if as represented your aforementioned trust investment certificates will be redeemed by the HFC at the same par value of P200,000.00 no taxable gain will be realized by you subject to the 15% final tax. cdtech Very truly yours, (SGD.) TOMAS C. TOLEDO Acting Commissioner