Ch.13-B Special Allowable Itemized Deductions & Net Operating Loss Carry-Over (NOLCO) Flashcards
Explain what deduction incentives are
are additional or bonus deductions with no actual cash outlay given by law as rewards for taxpayers who comply with certain policies or support certain government programs
Explain what special deductions are
are not actual expenses and may or may not involve cash outlay but are mandated by law as deductible against gross income as a matter of tax treatment. These should be classified under “special allowable itemized deduction” in the absence of an express regulatory guidance classifying them as ordinary deductions.
So far, the only special deduction that is expressly classified as an ordinary deduction is that allowed to
insurance companies
Under RA 9257, private establishments employing senior citizens shall be entitled to additional deduction from gross income equivalent to
15% of the total amount paid as salaries and wages to senior citizens
What are the conditions for deductibility of additional compensation for private establishments employing senior citizens
- Employment shall have to continue for at least 6 months
- The annual taxable income of the senior citizen does not exceed the poverty level as determined by the NEDA
Pursuant to RA 7277, as amended by RA 9442, private entities that employ disabled persons who meet the required skills or qualifications, either as regular employees, apprentices, or learners, shall be entitled to an additional deduction, from their gross income, equivalent to
25% of the total amount paid as salaries and wages to disabled persons
What are the requisites for deductibility in additional claimable compensation expense for persons with disability
- The entity present proof as certified by the Department of Labor and Employment that disabled persons are under their employ
- The disabled employee is accredited with the Department of Labor and Employment and the Department of Health as to his disability, skills, and qualifications
Under RA 7277, private entities that improve or modify their physical facilities in order to provide reasonable accommodation for disabled persons shall also be entitled to an additional deduction from their income equivalent to
50% of the direct costs of the improvements or modifications
Under RA 8502, and its implementing rules and regulations, a qualified jewelry enterprise duly registered and accredited with the Board of Investments (BOI) is entitled to an additional deduction from taxable income of
50% of the expenses incurred in training schemes provided by TESDA. The same shall be deductible during the year the expenses were incurred
Under RA 11534, labor training expenses incurred for skills development of enterprise-based trainees enrolled in public SHS, public higher educations institutions, or public technical and vocational institutions shall be claimed as additional deduction against gross income for how much?
50% of the value labor training expenses
Conditions of deductibility for labor training expenses
- Apprenticeship agreement between the enterprise (taxpayer) and the trainees pursuant to the Labor Code of the Philippines
- Certification from DepEd, TESDA, or CHED secured by the enterprise
- The amount of deductions shall not exceed 10% of direct labor wage
What is the Adopt-A-School Program
Private entities are allowed to assist a public school in particular aspects of their educational program within an agreed period of time
Qualification of participating schools in adopt-a-school act
Any government school in all levels may participate in the program. Priorities shall be given to schools located in the poorest provinces, low income municipalities, and other local government units experiencing severe classroom shortages, insufficient budget, or having numerous poor but high performing learners
