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Basis Ceiling Rule
Pension Trust
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Allowable Deductions:
-contribution during the taxable year
to cover pension liability accruing
during the year
-reasonable amount transferred or - not been allowed as
paid into such trust during the taxable deductions
year in excess of the contributions: -is apportioned in equal
parts over a period of 10
consecutive years beginning
with the year in which the
transfer of payment is made
Requisites for Deductibility:
-employer have established a pension
or retirement plan
-pension plan is reasonable and
actuarially sound
-must be funded by the employer
-contributed amount is no longer subject
to the employer’s control or disposition
-the payment has not been allowed
before as a deduction
-the amount is apportioned in equal
parts over a period of 10 consecutive
years beginning with the year in which
the transfer or payment is made
Deductible Payments
-contributions made in the taxable year -100% deductible
for the taxable year liability
-contributions made in the taxable year -reasonable amount -only one-tenth (1/10) is
for the previous year liability deductible for the taxable
year; 1/10 each succeeding
taxable years until it is
fully amortized)
N! in case of series of payments (yearly payments) intended to cover prior years liability to the plan, a 1/10 deduction from
each payments will be allowed as deduction until such period that each payment made is fully amortized
N! private retirement plan (RA No 4917) received by employees of a private firm (maintained by employer) are exempt from all
taxes provided the retiring employee has been in the service of the same employer for at least 10 years and is not less than 50
years of age at the time of his retirement