Making separation a less taxing situation | KPMG | PH

Making separation a less taxing situation

Making separation a less taxing situation

by Ivy Dianne M. Galzote

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As we start to feel the cold breeze of February and while little cupid is busy wandering around with his bow and quiver of arrows looking for a perfect match, the Bureau of Internal Revenue (BIR) has come up with something to ease the aching hearts of employers and their separated employees due to causes beyond their control. 

Pursuant to Section 32(B)(6)(b) of the Tax Code of 1997, as amended, the amount of separation benefits an employee receives as a consequence of separation from service because of death, sickness or other physical disability or for any cause beyond the control of the employee, shall be exempt from tax. Accordingly, no withholding taxes shall be deducted from the separation benefits and the entire amount shall be given to the entitled separated employee.

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