Gifts or Gratuities Do Not Constitute Wages

December 29, 1958 BIR RULING NO. 726-58 2nd Indorsement Returned to the Acting Regional Director, Regional District No. 3, Manila, the papers relating to the case of Fred Wilson @ Co., Inc. cdta Pursuant to Section 40 of Revenue Regulations No. 2, otherwise known as the Income Tax Regulations, pensions awarded by one to whom no services have been rendered are gifts or gratuities and do not constitute wages (see also Sec. 2(b) of Revenue Regulations No. V-8-A). Such being the case, the amount being remitted every month by the aforenamed company to the widow of Charles A. Clear as a token of gratitude for the services rendered by the latter as general manager of the former during his lifetime is not subject to the withholding tax on wages. It is, however, subject to the gift tax. Please be guided accordingly. cdti (SGD.) MELECIO R. DOMINGO Acting Commissioner of Internal Revenue