BIR Ruling

March 9, 1967 Mr. Toribio N. Aligato Revenue Collection Agent Maria Aurora, Quezon S i r : This refers to your letter dated February 8, 1967, stating the following: "1. Are JUDGES of the Municipal Court EXEMPT in Income Tax Payment on income derived from salary as Justice of the Peace? LLpr 2. If they are exempt in paying the TAX on Income, are they exempt in filing the Income Tax Return?" In reply thereto, I have the honor to inform you as follows: The term "gross income" as used in the Tax Code does not include those items of income exempted by statute or by fundamental law. Such tax-free income should not be included in the income tax return unless information regarding it is specifically called for. The exclusion of such income should not however, be confused with the reduction of gross income by the application of allowable deductions (Sec. 61, Rev. No. 2). Our Constitution provides in its Article VIII, Section 9, that the members of the Supreme Court and all judges of inferior courts "shall receive such compensation as may be fixed by law, which shall not be diminished during their continuance in office". Accordingly, the salaries of judges are not subject to income tax because the imposition of an income tax upon their salaries would amount to a diminution thereof which is an infringement of the fundamental charter. However, all judges who have income other than their salary are required to file an income tax return, otherwise they are not so required. In the case of married persons, the husband and the wife should file only one income tax return to cover the income of both spouses unless the filing of one consolidated return is impracticable, in which case, each spouse may file separate returns, but the income declared in such returns will be consolidated and the tax computed on such consolidated income (Sec. 45(d) of the National Internal Revenue Code). Tax-free income (income exempted by statute or by fundamental law i.e., judicial salary) should not, however be included in the return of income. prll Very truly yours, (SGD.) MISAEL P. VERA Commissioner of Internal Revenue