Tax Exemption of P500 Housing Assistance to Employees for One Year

December 14, 1994 BIR RULING NO. 180-94 28 000-00 180-94 Toyota Autoparts Philippines, Inc. Barangay Pulong Sta. Cruz Sta. Rosa, Laguna 4026 Attention: Mr . Tomoyuki Asano Treasurer/Comptroller Gentlemen : This refers to your letter dated October 24, 1994 stating that with the recommendation of your Labor Management Council, you granted a Housing Assistance Program to your rank-and-file employees due to the implementation of your 3-shift, 24-hour production operation starting October, 1994; that the Housing Assistance will start in October, 1994 up to September, 1995 amounting to P500.00/month; that the said Program is open to any rank and file employee who have relocated or will relocate to a house/apartment within the First District of Laguna or in the towns of Canlubang and Calamba; and that this Program aims to assist employees to relocate their residence nearer to your plant to avoid inconveniences and attendant risks arising from extended travel distance and time. Based on the foregoing representations, you are now requesting for a ruling to the effect that your P500.00/month housing assistance to your said employees for one year is not a compensation income, hence, not subject to income tax. In reply, please be informed that under Section 2(a) of Revenue Regulations No. 6-82 as amended by Revenue Regulations No. 12-86, implementing Section 72 of the Tax Code, as amended, facilities or privileges (such as entertainment, medical services, or so-called "courtesy" discounts on purchases) furnished or offered by an employer to his employees, generally, are not considered as compensation income subject to the withholding tax if such facilities or privileges are of relatively small value and are offered or furnished by the employer merely as a means of promoting the health, goodwill, contentment, or efficiency of his/its employees. 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-in-file employees is not subject to income tax and consequently, to the withholding tax prescribed under Section 72 of the Tax Code, as amended. cdll Very truly yours, LIWAYWAY VINZONS-CHATO Commissioner of Internal Revenue