When Settle the Pension Preparation Fund Account, the Remaining Amount Reclaimed Should be Report as Other Income for the Year.
National Taxation Bureau of Kaohsiung, Ministry of Finance expressed when the profit-seeking enterprise settle the pension preparation fund account with balance left, the balance should be reported as other income for the year when file the profit-seeking enterprise income tax for the year to avoid being penalized.
The National Taxation Bureau further stated that the profit-seeking enterprise, in accordance with Article 13, Paragraph 1 of the Labor Pension Act, apply the Labor Standards Act retirement system to its labor and retain the years of services before the Labor Pension Act. The labor retirement reserve continue to allocate complying with Article 56, Paragraph 1 of the Labor Standards Act has been listed as expenses of the year. After the profit-seeking enterprise pays the employee's pension and severance from the old pension, if there’s balance left in the account, because there’s no more employee that adapted Labor Standards Act retirement system left, the profit-seeking enterprise shall settle the pension preparation fund account and the remaining amount should be transferred to other income tax in the year.
The bureau recently checked the 2016 profit-seeking enterprise income tax settlement filing in the jurisdiction, and found that Company A had settled its old pension reserve fund account in 2016 because it had no employee who qualified for the old retirement pension, and took back the remaining. In the case of Company A, it did not declare the remaining income of the company, in addition to the tax, it also had to bear the penalty.
The bureau specifically reminds the profit-seeking enterprise that if the pension preparation fund account is settled and the remaining funds are recovered, it is necessary to declare the remaining amount as other income, so as to avoid tax penalties.
Contact: Mrs.Chen, the Auditor of the First Examination Division
TEL: 07-7256600 ext.7186