BIR Ruling [DA-064-00]

February 1, 2000 BIR RULING [DA-064-00] Sorsogon State College Sorsogon, Sorsogon Attention: Ms . Marilyn D . Berdin Administrative Officer V Gentlemen : This refers to your letter dated September 2, 1998 requesting for a ruling as to whether or not the Five Hundred Pesos (P500.00) additional compensation allowance (ACA) per month granted to government officials and employees under Administrative Order No. 53 dated May 17, 1993, is subject to income tax. It is represented that this problem arose out of the actions made on the Income Tax Returns for CY 1997 of the employees of that college which the Revenue District of the Province of Sorsogon has included ACA in the computation of taxable income; that it is also noteworthy to mention that there is no uniform implementation on the said Order. cdt 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 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 72 of the Tax Code, as amended (now Section 79 of the Tax Code of 1997) as implemented by Revenue Regulations No. 6-82, as amended (now Revenue regulations No. 2-98), and the only time 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 deduction pending its formal integration into the basic pay of the subject Government personnel with salary grade up to Grade 25". (Emphasis supplied) Very truly yours, Commissioner of Internal Revenue By: (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner Legal and Enforcement Group