By: Garry S. Pagaspas
The present flooding brought about by habagat winds is my third walk in the floods on my way home – F.B. Harisson near corner Vito Cruz, Manila.
It is in these times that each one of us capable of doing anything good to others in need must gave no hesitation. I was trying to figure out how to extend a hand for myself until this article writing crossed my mind to knock some hearts. I would love to relate some tax aspects in an attempt to help, in a way or another.
Taxpayers, please donate to Habagat Flood victims in the Philippines
I have this principle that if given a choice, I wuld rather help than be helped. The very heart of donating is the satisfaction seeing other’s happiness with the things we give, no matter how small or big. We become happier with seing the smiles on thier faces without anticipation of a return.
Another good thing you could enjoy with you donation is the tax deduction for income tax purposes. Your donatios to accredited donee institions such as charitable institutions and foundations are 100% deductible expense from your quarterly or annual income tax return.
Example: If you donate P100,000 for Habagat Flood victims in the Philippines, be it for Metro Manila or nearby provinces, the entire amount is allowed as a deduction from your gross income in computing your taxable income.
With the 30% income tax rate for corporations, or 5-32% income tax rate for sole proprietors, the taxable net income will be reduced by P30,000, m0re or less. It is as if you only donated P70,000 because of the tax benefit, so you may consider donating more for more tax benefits. They will provide you Certificate of Donation that you will use as support on the claim of deduction. Likewise, these donations are exempt from donor’s tax of 30% or 2-15% for relatives.
Same 100% income tax benefit deduction will apply to donations to government institutions under priority of NEDA. On the other hand, if donations are made to non-accredited donee institutions, then, your allowable deductions as charitable contributions shall be limited to not more than 5% of corporate taxable net income before charitable contribution or not more than 10% for individuals. If you do it yourself, directly giving relief goods and other necessaries, then, it might not be deductible because it is not an ordinary or necessary business expense. Justifying the same as a corporate social responsibility (CSR) drive may not avoid the issue on substantiation and relation of the expense to business operations.
Please do not get me wrong. I am not saying, you donate for the tax benefit. What I wish to state is that you help our fellow citizens (Kababayans) through giving some things you have that they may use them in this times of loss. In so doing, you may opt to claim tax deductions so you could donate more. If you are a pure compensation income earner, and not engaged in any trade or business or profession in the Philippines, your every donation is most welcomed even without the tax benefits. What matters is, that we share our blessings to those in dire need.
Thanks to the Office of the President, you can choose from among the list where to course through your donations of any kind. Please see at this link – EVACUATION & RELIEF OPERATIONS CENTERS.
Casualty losses deduction for income tax purposes
Casualty losses deduction for income tax purposes
For flooded taxpayers, you can also claim deductions for casualty losses – loss by flood as acts of nature. The BIR would require you to submit a notice of loss within forty-five days from date of casualty loss in the Philippines, and a proof of loss of such property used in trade or business or practice of profession. If such property is insured, then, you can only claim the excess of book value over the proceeds of the insurance.
During the typoon Ondoy, many suffered loss but only few were able to claim casualty losses for failure to submit with the BIR the proof of loss within the 45-day period. Notice of Casualty loss is a simple letter informing the BIR that the taxpayer’s specific property used in trade or business or practice of profession has been lost by acts of nature – Flood from Habagat Winds in the Philippines, and attaching therewith such documents and papers in support of the fact of loss such as Certifications from the barangay or city or other government agencies, and such other documents available.
Finally, the tax benefits are not the major necessity now. What matters is we save and preserve the lives of our fellow.So please, please, please, let us help those victims of the floods by giving anything of value – used clothing, relief goods,foods, clean drinking waters, or funds for their basic necessities.
May God Bless all those noble and giving hearts who will share thier earthly possessions for the flood victims, and we pray for the safety of the victims.
Disclaimer: This article is for general conceptual guidance only and is not a substitute for an expert opinion. Please consult your preferred tax and/or legal consultant for the specific details applicable to your circumstances. For comments, you may also please send mail at info(@)taxacctgcenter.ph, or you may post a question at Tax and Accounting Center Forum and participate therein.
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