Documente Academic
Documente Profesional
Documente Cultură
DATE:
TO:
FROM:
15MARCH2015
MR.JAMESDOE
PayrollManager
BBIMarketingPhil.Inc.
ATTY.KARLLESLIESOCHAN
AttorneyI
RE:
TAXTREATMENTOFMONTHLYHOUSINGALLOWANCE
1.MonthlyHousingAllowanceisaDEDUCTIONfromgrossincome.
In BIR Ruling No. 05599,1 if the living quarters are furnished to an employee for the
convenience of the employer, the value thereof need not be included as part of
compensation income subject to withholding as it was for purposes of complying with
the state policies on the promotion of the health and welfare of workers (Articles 11,
Sections 15 and 18 of the 1987 Constitution) and the constitutional mandate
guaranteeing fullprotection to labor(Art.13, Sections3and14,ibid
.),thissituationfalls
withinthepurviewofSection33oftheTaxCodeof1997.
Such being the case, the costs and related expensesassociated withthe lease ofthe
condominium unit andresidentialhouse forthe benefit of theemployees are expenses
directly attributable to the development, management, operation and/or conduct ofthe
business pursuant to Section 34(A)(1) of the Tax Code, the same shall be deducted
fromthegrossincomeof[thecompany].2
BIRRulingNo.05599,April23,1999.
Ibid.
3
Hendersonv.Collector,G.R.No.L13049,February28,1961.
2
Expoundedrequirementsforthedeductionare:4
1.Expensemustbeordinaryandnecessary.
2.Musthavebeenpaidorincurredduringthetaxableyear.
3.Musthavebeenpaidorincurredincarryingonthetrade/business.
4.Mustbesupportedbyreceipts,recordsorotherpertinentpapers.
2.MonthlyHousingAllowanceisnotsubjecttoFringeBenefitTax.
HOUSINGPRIVILEGE
MonetaryValue
(A) Iftheemployer
leasesaresidentialpropertyfortheuse 50% of the monthly
of his employee and the property is the usual place of rental paid as
residenceoftheemployee.
evidenced by the
leasecontract.
(B)Iftheemployerpurchasesaresidentialpropertyfor the (Acquisition Cost
useof hisemployee andthepropertyis the usualplaceof (AC)x5%)x50%
residenceoftheemployee.
(C) If the employer purchases a residential property and ACorFMV
,
transfers
ownershiptotheemployee.
whicheverishigher.
Iflessthan
employersAC:
FMVEmployees
AC
(D)Housingofmilitaryofficials
Exempt
(E)Housingsituatedinsideoradjacenttothepremisesofa Exempt
businessorfactory(withinfifty(50)meters)
(F) Temporary housing for employees who stays in a Exempt
housingunitnotmorethanthree(3)months.
CIRv.IsabelaCulturalCorporation,G.R.No.172231,February12,2007Zamorav.Collector,G.R.No.
L15290,May31,1963.
EXPENSEACCOUNT
SubjecttoFBT?
NO
,but
consideredas
taxablecompensation
incomesubjecttothe
taximposedunderSec.
24.(Incomeofthe
employee)
*
Exemptifpartofthe
ordinaryand
necessarytrade,
businessor
professionalexpenses
assupportedby
receipts,recordsor
otherpertinentpapers.
Since the monthly housing allowance ranging from Php 5,000 toPhp 20,000 a month
given to employees who move tocondominiums withinonejeepneyride from Salcedo
Village is not within any of the expanded definitions of Housing Privileges, it shall
pertaintoanExpenseAccountunder(A)whichis
notsubjecttoFringeBenefitTax.
Assuch,andconsideringthatitisafringebenefitfortheconvenienceandadvantageof
the employer, it shall notbe included as part ofcompensation income of theemployee
subjectto withholding neither will it be subjectto the fringe benefitunderSec.33ofthe
TaxCodeof1997implementedbyRevenueRegulationsNo.398.5
3.AdditionalrequirementsforDEDUCTIBILITY.
1.Section34,Section58(onreturnsandpaymentoftaxeswithheldatsource)and
2.Section81(onfilingofreturnandpaymentoftaxeswithheld).
(Sgd.)Atty.KarlLeslieSoChan
Supra.
Note1.