Special Allowable Itemized Deductions

Additional Compensation Expense for (1) Senior Citizen and (2) PWD

(3) Additional Deduction for Facilities Improvements for PWD

Additiona training expense/labor expenes under (4) Jewelry Industry Development Act and (5) CREATE Law

Additional contribution expense under (6) Adopt-a-school Program

Addtional deductions under (7) Expanded Breastfeeding Promotion Act and for (8) Free Legal Assistance

Additional (9) Productivity Incentive Bonus expense

DEDUCTION INCENTIVES

(1) Income distribution from taxable estate or trust

(2) Divdend distribution for Real Estate Investment Trust (REIT)

(3) Transfer of Reserve Funds of Taxable Cooperatives

(4) Discounts to Senior Citiznes and (5) PWD

Special Deductions under NIRC and Special Laws

Additional COMPENSATION EXPENSE for SENIOR CITIZEN: RATE

15% of total amount paid as salaries and wages to senior citizens

Additional COMPENSATION EXPENSE for SENIOR CITIZEN: REQUITES

- at least 6 months of employment

- annual taxable income of senior citizen does not exceed poverty line of NEDA (senior citizens shall submit to employer a sworn cert. that his annual taxable income does not exceed poverty level)

Additional COMPENSATION EXPENSE for PWD: RATE

25% of total amount paid as salaries and wages to senior citizens

Additional COMPENSATION EXPENSE for PWD: REQUITES

- entity presents proof as certified by DOLE that they employ a PWD

- PWD is accredit with DOLE and DOH as to his ability, skills, and qualifications

Cost of FACILITIES IMPROVEMENT for PWD

50% of direct costs of improvements or modification

Additional TRAINING EXPENSE Under the JEWELRY INDUSTRY DEVELOPMENT ACT OF 1998: RATE

50% of expense incurred in training schemes APPROVED by TESDA

*deductible during the year the expense were incurred

Additional TRAINING EXPENSE Under the JEWELRY INDUSTRY DEVELOPMENT ACT OF 1998: REQUISITES

- QUALIFIED JEWELYRY ENTERPRISE -> qualified by Board of Investments

- traning scheme is aprroved by TESDA

Additional LABOR TRAINING EXPENSE Under the CREATE LAW: RATE

LOWER OF;

(A) 50% of value of labor training expense incurred for the skills development of the enterprise-based trainees ENROLLED IN PUBLIC SHS, PUBLIC HEI, OR PUBLIC TECHNICAL AND VOCATIONAL INSTITUTIONS

(B) 10% of Direct Labor Wage

Additional LABOR TRAINING EXPENSE Under the CREATE LAW: REQUISITES

- APPRENTICESHIP AGREEMENT between enterprise (taxpayer) and trainees in pursuant to the Labor Code of PH

- Certification from DEPED, CHED, or TESDA secured by enterprise

- Amount of Deduction shall NOT EXCEED 10% if DIRECT LABOR WAGE

What is ADOPT-A-SCHOOL PRGRAM OF 1998?

Who Can Particitpate?

A private entity adopts a public school by assisting with their educational program by teaming up with CHED, DEPED, or TESDA. Assitance may be aid in money or in kind (even training and skills development and health and nutrition package)

An adopting entity may be an individual in business, practice of profession, a partnership, or a corporation.

ADOPT-A-SCHOOL PRGRAM OF 1998: Qualification of participating schools? Who are the priorities?

Any GOV'T SCHOOL in ANY LEVEL may participate

Priorities located in poorest provinces, low income municipilaties/other LGU experiencing severe classroom shortage, insufficient budget, or having numerous poor but high performing learners.

ADOPT-A-SCHOOL PRGRAM OF 1998: Qualification of Adopting Entity?

- credible track record

- existed for at least a year

- not have been prosecuted and found guilty in illegal activities such as money laudering and other similar circumstances

ADOPT-A-SCHOOL PRGRAM OF 1998: Valuation of Deductions (Cash, Personal Property, Consumable Goods, Services, Real Properties)

Cash - face amount shown on receipt

Personal Property - acquisition cost (is the depreciated amount when it comes to movable property)

Consumable goods - lower of (a) acquisition cost or (b) value at date of fonation

Services - lower of (a) value of service rendered or (b) actual expense incurred by donor

Real Properties - lower of (a) fair value (higher of zonal or assessed value) at time of contribution (b) depreciated cost [if land, acquisition cost]

Additional contribution expense under ADOPT-A-SCHOOL PRGRAM OF 1998: RATE (RAID and SAID)

BY RAID (basically A-A-S being a priogram);

- Contribution to Priority Program: FULL

- Contribution to NON-Priority Program: PARTIAL (Indiv. - 10% / Corpo. - 5% against net income before contribution)

BY SAID;

- 50% of the Contribution of Adopting entity

*lower of actual cost of service and the agreed value shall be considered

Additional contribution expense under ADOPT-A-SCHOOL PRGRAM OF 1998: Conditions for Deductibility

1. deduction shall be availed in the taxable which the expense is paid or incurred

2. expense is substantiated with sufficient evidence which includes (a) amount of expenses (b) direct connection/relation of the expenses of entity for A-A-S (c) proof of acknowledgement of receipt of contrbution by the receiving public school

3. application has approved MOA, endorsed by National Secretariat filed to the local RDO of adopting school

Additional contribution expense under ADOPT-A-SCHOOL PRGRAM OF 1998: Procedured of Availment

1. MOA, minimum of 2 years pre-terminable only when adopting private entity dissolved prior to end of contract or when terminated for failure to possess qualification

2. SUPPORTING EVIDENCE,

3. APPLY FOR CERT OF TAX INCENTIVE and TAX EXEMPTION to the Secretariat with authorized and approved MOA, Deed of Donation, Official Receipts, Cert of Title and tax Declaration, other relevant

EXPANDED BREASTFEEDING PROMOTIONA ACT OF 2009: Requirements to all ESTABLISHMENTS (Lactation Station: Lactation Period, Access to Breastfeeding Information)

- Lactation Station with nurse, exception is when not necessary. PRIVATE SECTOR may secure exemption from DOLE. PUBLIC SECTOR may apply thru CHAIPERSON OF CIVIL SERVICE COMMISSION. CERT. OF EXEMPTION will be valid for 2 YEARS

- Lactation Period: nursing employee shall be granted breaks not less than 40 minutes for every 8 hour working period additional to the usual breaks. Required aditional breaks are compensable hours

- Access to Breastfeeding Information: employees must be well aware of such Act

EXPANDED BREASTFEEDING PROMOTIONA ACT OF 2009: Requirements to all HEALTH INSTITUTIONS (Rooming-in Policy, Milk Storage Facility, Milk Banks)

Rooming-in Policy - newborn infants and mother are roomed-in immediately after birth for certian length of time / if not possible, there should be a facilities for milk expression and milk storage

Milk Storage Facility - space for collecting and storing milk among separated mother and baby due to medical reason. Has a dedicated and trained personnel.

Milk Banks - source of breast milk for the infants in need. Has a dedicated and trained personnel.

*Medical Centers and Regional Hospitals, milk banks should be operated on NON-PROFIT basis, but may charge processing, screening, and administrative costs. However, inability to pay such charges shall not be a reason for non-availment of milk.

Addtional deductions under EXPANDED BREASTFEEDING PROMOTIONA ACT OF 2009: RATE

100% Expense incurred by PRIVATE HEALTH INSTITUTION complying with the ROOMING-IN and BREAST-FEEDING PRACTICES

MILK BANK (Total Expenses - FEES COLLECTED FROM PATIENTS = Excess Expense) 100%

** REMEMBER!! STATE HOSPITALS ARE NOT TAXABLE therefore deduction is ZERO

*** "UP TO TWICE of amount incurred" - deductible pa rin naman kasi siya as RAID

Addtional deductions under EXPANDED BREASTFEEDING PROMOTIONA ACT OF 2009: Conditions for Deductibility

- DEDUCTION shall apply for the TAXABLE PERIOD when the EXPENSES WERE INCURRED

- all health or non health facilities, establishments and institutions shall comply with IRR of RA 10028 w/n 6 MONTHS OF APPROVAL

LEGAL ASSISTANCE (RA 9999): Requirement for Availment

- Secure certification from PAO, DOJ, or ASSOCIATION accredited by SUPREME COURT regarding pro bono practice

- number of hours cert is provided by lawyer or partnership

Addtional deductions under FREE LEGAL ASSISTANCE (RA 9999): RATE

Lower of

(a) what could have been collected for the actual service

(b) 10% of gross income derived from the actual performance of legel profession (gross receipts - cost of service)

*FREE LEGAL SERVICE must be exclusive of 60-hour mandatory free legal assistance

Addtional PRODUCTIVITY INCENTIVE (ACT OF 1990) BONUS EXPENSE: RATE

50% of the total productitvity bonuses given to employee under the program

* not allowed during pendency of a strike or lockout arising from any violation of productibity incentive program

Addtional PRODUCTIVITY INCENTIVE (ACT OF 1990) BONUS EXPENSE - for providing MAN POWER TRAINING AND SPECIAL STUDIES for RANK N FILE employees

50% of additional deduction of the total grant for local trainings and special duties

INCOME DISTRIBUTION MADE BY TAXABLE ESTATES OR TRUST: AMOUNT

the income distribution itself (which are not subject to any other income tax beside RIT) transferred to heirs/trustees/beneficiaries GI is deductible against the GI of administrator fo the taxable estate

DIVIDEND DISTRIBUTION OF REAL ESTATE INVESTMENT TRUST (REIT) [a publicly listed corp. for real estate assets] - Legally mandated distributable income as dividends to shareholders? Amount?

90%

all the 90% are deductible by SAID

TRANSFER TO RESERVE FUND OF COOPERATIVES - Amount?

amount transferred by the cooperative to the reserve fund out of the net surplus from unrelated activities is the deduction to SAID

EXPANDED SENIOR CITIZEN'S ACT OF 2003 - RATE

20% (not exceeding this threshold) net of VAT as to GROSS SALES

REMEMBER!! "gross RECEIPTS" pertains to actual cash collections therefore discounted amount. Gross Receipts must be gross up (X/80%) before multiplying to the 20% discount.

DISCOUNTS TO PWD - Rate

20% (not exceeding this threshold, this is chargeable of VAT) as to GROSS SALES

REMEMBER!! "gross RECEIPTS" pertains to actual cash collections therefore discounted amount. Gross Receipts must be gross up (X/80%) before multiplying to the 20% discount.

NOLCO CONSIDERATIONS

- previous years NOLCO cannot be deducted to NOL

- GR: expires in 3 years; Except:2020 and 2021 which expires on the 5th year (for fiscal years, pasok if ang end ay June 30, 2021 and 2022)

- If tax exempt during the year, the NOL cannot be claimed as NOLCO

- if there's a substantial change in ownership (at least 75%), prior years NOLCO are not transferrable

- FIFO