BIR Ruling [DA-190-00]

March 30, 2000 BIR RULING [DA-190-00] Mr. Laurente A. Bernal SB Secretary, Sangguniang Bayan Municipality of Manito, Albay S i r : This refers to your letter dated July 10, 1998 requesting for a clarification on whether the additional compensation allowance (ACA) of P500.00 per month given to government personnel per Administrative Order No. 53 dated May 17, 1993 is taxable. cdlex In reply, please be informed that the Five Hundred Pesos (P500.00) additional compensation per month granted to government officials and employees beginning May 1, 1993 with salary grade up to grade 25 under Administrative Order No. 53 is in the nature of compensation as explicitly provided in the first "WHEREAS clause" of the said Order. However, Item No. 1 (1.2) of the said Order provides, viz: "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 deductions pending its formal integration into the basic pay of the subject government personnel." Such being the case, the said P500.00 additional compensation shall be subject to income tax prescribed under Section 24 (A)(1)(c) of the Tax Code of 1997. However, inasmuch as it has not yet been formally integrated into the government personnel's basic pay, the sum/total of the additional compensation allowance received by government personnel within a year shall form part of their year end adjusted compensation income for purposes of computing their taxable net income. (BIR Ruling No. DA-35-98 dated February 2, 1998) LibLex Very truly yours, Commissioner of Internal Revenue By: (SGD.) SIXTO S. ESQUIVIAS IV Deputy Commissioner (Legal and Enforcement Group)