BIR Ruling [DA-063-00]

February 1, 2000 BIR RULING [DA-063-00] Ms . Marcia Katrina B . Acuna # 134 Barangay 16 Old Albay, Legaspi City 4500 M a d a m : This refers to your letter dated September 17, 1998 requesting for a ruling as to whether or not the P500.00 Additional Compensation Allowance (ACA) per month granted to government officials and employees with salary grade up to Grade 25 as prescribed under Administrative Order No. 53 issued on May 17, 1993 is taxable or not. It is represented that some government agencies consider the same (ACA) as subject to tax, while some do not, hence the above query. In reply, please be informed that in several rulings issued by this Office on the same subject matter, the latest of which is BIR Ruling No. DA-184-98 dated May 8, 1998 addressed to the Regional Director, Revenue Region No. 10, Legaspi City, we have consistently ruled that the subject P500.00 additional compensation allowance is subject to income tax, although it is not yet subject to the withholding tax prescribed under Section 79 of the Tax Code of 1997, as implemented by Revenue Regulations No. 2-98, and the only that it will be subjected to the withholding tax deduction, is upon its formal integration to the basic pay of the said government personnel as provided for under paragraph 1(1.2) of the said Administrative Order No. 53, reading: "This Administrative Order is issued to extend the same privilege to the rest of the personnel of the government, which shall partake of an allowance and not subject to GSIS, HDMF Fund, premiums and income tax declarations pending its formal integration into the basic pay of the subject Government personnel with salary grade up to Grade 25." (Emphasis supplied) aisadc Very truly yours, Commissioner of Internal Revenue By: (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner Legal and Enforcement Group