BIR Ruling No. 164-82

May 6, 1982 BIR RULING NO. 164-82 021 000-00 164-82 Office of the Tanodbayan (Ombudsman) Second Floor, Malacaang Annex Building 1610 Jose P. Laurel Street San Miguel, Manila Attention: Mr . Bernardo P . Fernandez Tanodbayan Gentlemen : In reply to your letter dated April 23, 1982, I have the honor to inform you that transportation and representation allowances, if paid through reimbursements or advances to Tanodbayan officials and employees, including officials and employees of other ministries, bureaus and agencies who may be called upon to assist the Tanodbayan in the performance of his duties pursuant to Section 33 of Batas Pambansa Blg. 131, are not wages and, therefore, exempt from the withholding tax. (Sec. 8, Rev. Regs. No. 1-82 dated March 18, 1982) Under payment through reimbursements, the employee spends first for transportation and representation expenses in the performance of his duties. After submitting an accounting, he is later reimbursed for said expenses by the employer. Under payment through advances, the employer gives the employee a certain sum in advance to cover anticipated expenses in the performance of his duties. The employee submits an accounting to his employer of the amount actually spent out of the cash advance and any excess of the advance given the employee over the amount actually spent is returnable to the employer. Consequently, commutable allowances, i.e., fixed allowances given to employee become more reimbursements or advances , as the case may be, if the employee makes an accounting or liquidation that said allowances were actually spent in the performance of his duties. cdtech Please be informed that under the present modified gross income taxation as embodied under B.P. Blg. 135 and its implementing regulations, commutable allowance, i.e., fixed transportation and representation allowances given to employee without any accounting form part of the gross compensation income subject to income tax. Very truly yours, RUBEN B. ANCHETA Acting Commissioner