BIR Ruling [DA-291-97]

August 28, 1997 BIR RULING [DA-291-97] Toyota Autoparts Philippines, Inc. Toyota Sta. Rosa (Laguna) Complex Special Export Processing Zone Barangay Pulong Sta. Cruz, Sta. Rosa, Laguna Attention: Mr. Kenichi Yoshida Treasurer/Comptroller Gentlemen : This refers to your letter dated February 19, 1997 requesting a ruling to the effect that the P500.00 monthly housing assistance/allowance paid by you to your employees is not subject to income tax and consequently to the withholding tax on wages. In BIR Ruling No. 180-94 dated December 14, 1994 addressed to you on the same subject matter, this Office held that xxx xxx xxx "Such being the case, and since the purpose of your Housing Assistance Program amounting to P500/month is to assist your rank-and-file employees in relocating their residence nearer to your plant to avoid inconveniences and attendant risks arising from extended travel distance and time thereby promoting their health, contentment and efficiency, this Office is, therefore, of the opinion, as it hereby holds that your Housing Assistance Program amounting to P500.00/month to your aforesaid rank-and-file employees is not subject to income tax and consequently to the withholding tax prescribed under Section 72 of the Tax Code, as amended" EACTSH It is represented that the Housing Assistance Program is extended on a year to year basis subject to the approval of Toyota Autoparts Management based on the recommendation of the Labor Management Council; and that the P500.00 monthly subsidy is being reimbursed to your employees after showing payment receipt regardless of the actual amount paid by them. In reply thereto, please be informed that pursuant to Section 28 (b) (8) (F) of the Tax Code, as amended by R.A. No. 7833, the "13th month pay" and "other benefits" in the aggregate amount not exceeding P30,000.00 received by officials and employees of the national government, local government units and agencies, including government-owned and controlled corporations, as well as by officials and employees of private corporations and entities paid or accrued beginning January 1, 1994 are exempt from income tax, and consequently from the withholding tax on wages. The term "13th month pay" shall refer to the mandatory one month basic salary of an official or employee of the national government, local government units, agencies and instrumentalities, including government-owned and controlled corporations, and of private offices received after the 12th month pay, while the term "other benefits" shall refer to all benefits other than the 13th month pay, such as, the annual Christmas bonus given by private offices, 14th month pay, mid-year productivity incentive bonus, gifts in cash or in kind and other similar benefits received by an official or employee for one calendar year in an amount not exceeding Twelve Thousand Pesos (P12,000.00) as maximum limit. ACcDEa Accordingly, the P500.00 monthly housing assistance/allowance may be considered as falling within the contemplation of "other benefits" provided for under Section 28 (b) (8) (F) of the Tax Code, as amended, and, therefore, need not form part of your employees' taxable compensation income subject to the withholding tax on wages under Revenue Regulations No. 6-82, as amended by Revenue Regulations 4-93, implementing R.A. No. 7497, amending Section 72 of the Tax Code, as amended, provided, however, that such "other benefits", inclusive of the amount of P500.00 monthly, shall not, in the aggregate exceed P12,000.00; and that when added to the 13th month pay, the total amount of the tax exempt benefits shall not exceed P30,000.00. (BIR Ruling No. 024-95) This ruling is being issued on the basis of the foregoing facts as represented. However, if upon investigation, the facts turned out to be different, then this ruling shall be considered null and void. HaTAEc Very truly yours, (SGD.) SIXTO S. ESQUIVIAS IV OIC, Assistant Commissioner (Legal Service)