Deductibility of Travelling Expenses Incurred by Government Employees Required to Render Rural Service Under Letter of Instructions No. 559

March 3, 1978 REVENUE MEMORANDUM CIRCULAR NO. 011-78 SUBJECT : Deductibility of Travelling Expenses Incurred by Government Employees Required to Render Rural Service Under Let ter of Instructions No. 5 59 TO : All Internal Revenue Officers and Others Concerned 1. Section 30(a) of the Tax Code provides that travelling expenses incurred while away from home in the pursuit of a trade or business are deductible from gross income. The implementing regulations provide that "if an individual whose business requires him to travel receives a salary as full compensation for his services, without reimbursement for travelling expenses, . . . his travelling expenses, including the entire amount expended for meals and lodging, are deductible from gross income (Section 66, Income Tax Regulations ). 2. "Home" for the purpose of the travel expense deduction means the principal place of business, employment, or post of duty, regardless of where the family residence is maintained. The term "away from home" means that a taxpayer travelling on business may deduct the cost of his meals and lodging only if his trip requires him to stop for sleep or rest (U.S. v. Correll, 389 U.S. 299). Thus, when an individual is absent from his regular place of employment on work covering a relatively short period of time, he is considered to be temporarily away from his "tax home" and he is entitled to deduction of travel expenses for the duration of such temporary assignment (Par. 11, 365, Vol. 2, Prentice-Hall, Federal Taxes , 1974). 3. Under Letter of Instructions No. 559, all officials and employees in the government service including contractual and emergency personnel and those employed in government-owned or controlled corporations, and in all local governments, provincial, city, municipal and other political subdivisions, are required to render service in the rural areas for a period of at least fifteen days within a given calendar year on official time. Accordingly, if a government employee is assigned to render service in a rural area which is distant from the city, municipality or locality where his regular or permanent place of employment is located and although he is not given per diems to cover his board and lodging, as well as transportation expenses, he may deduct travelling expenses which he paid at incurred in complying with such assignment. However, a government employee who is assigned in a rural area which is within the locality where his principal place of employment or post of duty is located and during which such assignment does not require him to stop for sleep or rest at the place where he is so assigned to render rural services, is not entitled to deduct travelling expenses. For example, an employee of the Department of Agriculture permanently assigned in Quezon City and required to render rural service in Zamboanga is entitled to deduct travelling expenses incurred in going to and from Zamboanga. But a physician in a government hospital located in a municipality of a province who renders rural service in one of the barangays of the same municipality cannot claim traveling expenses because he is not considered "away from home." 4. Claims for travelling expenses must be reasonable and duly supported but shall not exceed the amount of travelling expense allowances usually given to an officer or employee when required to travel on official business outside his permanent official station. For the information and guidance of all concerned, in determining the reasonableness of amounts allowable as deduction for travelling expenses, Section 1 of Presidential Decree No. 344 prescribing the minimum and maximum amount of per diems is quoted below: aisa dc "SECTION 1. When an officer or employee is required to travel on official business outside of his permanent official station, he shall be entitled to per diems to cover his board and lodging which shall be fixed on the basis of salary and in accordance with the rules and regulations promulgated by the Commissioner on Audit to implement this Decree: Provided , That such per diems shall not be below the minimum nor above the maximum as fixed herein: Minimum Maximum Greater Manila Area (Manila, Quezon City, Caloocan City, Pasay City, Makati, Mandaluyong, San Juan, Pasig, Paraaque, Marikina), Baguio City, Tagaytay City, Bacolod, Iloilo, Davao, Cebu and other first class cities P30 P35 Other Chartered Cities 25 30 Places other than Cities 20 25 Provided , further , That he shall be entitled to transportation expenses in going to and coming back from his destination and to a daily allowance while in the field at the rate of P10.00 a day in chartered cities and P5.00 in all other places to cover his incidental transportation and other expenses: Provided , finally , That the Department Head may authorized the granting of representation expenses, if necessary, subject to existing rules and regulations for this purpose." 5. In order to facilitate determination of the reasonableness of such travelling expenses, government officers and employees claiming deduction for travelling expense paid or incurred in connection with the fifteen-days assignment in rural areas should attach a statement showing the itemization and computation of the total amount claimed in their income tax returns. 6. The government official or employee shall declare as part of his taxable gross income, the money value of the commutation of his vacation leave corresponding to the duration of the rural service which, under Presidential Decree No. 1186, was paid to him (in addition to his basic salary). 7. All internal revenue officers and employees are enjoined to be guided by this circular and to give it as wide a publicity as possible. aisa dc EFREN I. PLANA Acting Commissioner of Internal Revenue TAN-P4519-F2828-A-8