BIR to exempt certain benefits from Income Tax

MANILA, Bulletin – The Bureau of Internal Revenue (BIR) came out yesterday with regulations exempting from income tax certain financial benefits received by employees from their employers.

BIR commissioner Kim S. Jacinto-Henares issued Revenue Regulations No. 5-2011 as the April 15 deadline in the filing of 2010 income tax returns (ITRs) nears.

She declared the deadline will not be extended and fines will be imposed against late filers including the 25 percent surcharge on the amount due.

In amending the old Revenue Regulations No. 5-2008, the BIR chief said the following benefits not subject to income tax as well as withholding tax on compensation income of both managerial and rank-and-file employees are monetized unused vacation leave credits of private employees not exceeding 10 days during a year and monetized value of vacation and sick leave credits paid to government officials and employees.

Also covered by the tax exemption privilege are medical allowances to dependents of employees, rice subsidy, uniform and clothing allowances, medical support and laundry allowance.

Daily meal allowance for overtime work and gifts given during Christmas and anniversary celebrations not exceeding P5,0000 per employee per annum are likewise included.

Exempted from taxation are achievement awards for length of service, or safety achievement which must be in the form of material things other than cash or gift certificate, with an annual monetary value not exceeding P10,000.

“All other benefits  not included in the regulations shall be subject to income tax as well as withholding tax on compensation,’ Ms. Henares said. –JUN RAMIREZ, Manila Bulletin