BIR Ruling

August 31, 1976 Associations Which are Qualified Recipients of Tax Free Donations This refers to your request (a) for exemption from the payment of income tax and the filing of the corresponding income tax return under Section 27 of the Tax Code, and (b) for a Certification of your qualification as a donee or legatee entitled to the benefits provided for in Presidential Decree No. 507. From the documentary evidence submitted to this Office, it appears that the Wheelchair & Disabled Association of the Philippines, is a non-stock, non-profit corporation duly registered with the Securities & Exchange Commission; that the purposes for which the corporation is formed are: A) To create a positive public attitude towards paraplegics and other severely disabled citizens of the community; B) To assist the paraplegics and other severely disabled attain maximum social, economic, educational, and moral development within the limits of their physical disabilities; C) To institute, initiate, or support programs and projects that will assist the paraplegics and other severely disabled towards their full integration with the community in both social and economic endeavors of daily living and D) To coordinate with other civic and welfare organizations, both government and private, involved in the upliftment of paraplegics and other severely disabled; that the corporation is maintained primarily by gifts, bequests, endowments or other similar grants which the Association may receive from time to time and from membership dues; and that no part of its net income inures or accrue to the benefit of any private individual or member. cdtech Based on the aforestated facts, the Wheel and Disabled Association of the Philippines, Inc., is obviously organized and operated exclusively for charitable purposes as contemplated under Section 27(e) of the Tax Code and therefore exempt from the payment of income tax in respect of income received by it as such organization. Hence, it need not file an income tax return covering such income. However, it is subject to income tax on income derived from any of its properties, real or personal, or any activity conducted for profit, regardless of the disposition thereof, which income should be returned for taxation. And even if no taxable income is earned, it should file on or before April 15 of each year, an annual information return stating under oath its gross income and the sources thereof and the expenses incurred during the preceding year, attaching thereto: a) A profit and loss statement; b) A balance sheet; and c) A certificate attesting that there has not been any change in its By-Laws, Articles of Incorporation and its activities and manner of operation. As the Association is a charitable organization, pursuant to Presidential Decree No. 507, all gifts, bequests, donations and/or contributions to that Association are exempt from the donor's and estate taxes and shall be deductible in all in computing the taxable net income of the donor, subject to the condition that not more than 30% of the donation or bequest shall be used by that Association for administration purposes. cdtech