Special Allowable Deductions

Question 1

Sales Discounts to Senior Citizens & PWDs

Answer 1

20% of the gross selling price; deductible against gross income

Question 2

Requisites/conditions for deductibility of sales discounts to senior citizens

Answer 2

1. Only the portion of the gross sales exclusively used. consumer, or enjoyed by the senior citizen/pwd.
2. The gross selling price and the sales discount must be separately indicated in the official receipt or sales invoice issued by the establishment.
3. Only the actual amount of discount granted or sales discount not exceeding 20% of the gross selling price can be deducted from the gross income, net of VAT, if applicable.
4. The discount can only be allowed as deduction from gross income for the same taxable year that the discount was granted.
5. The business establishment giving sales discounts is required to keep a separate and accurate record of sales which shall include substantial information.

Question 3

Additional Claimable Compensation Expense for Senior Citizen Employees

Answer 3

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

Question 4

Requisites/conditions for deductibility of additional compensation

Answer 4

1. Employment shall have to continue for at least 6 months

2. The annual taxable income of the senior citizen does not excees the poverty level as determined by the NEDA

Question 5

Additional claimable compensation expense for PWDs

Answer 5

Private entities that employ disabled persons who meet the required skills or qualifications 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

Question 6

Requisites for deductibility of compensation expense of PWDs

Answer 6

1. The entity presents proof as certified by DOLE that disabled persons are under their employ
2. The disabled employee is accredited with DOLE and DOH as to his disability, skills, and qualifications

Question 7

How would the actual salaries be presented and the 25% additional salaries expense?

Answer 7

The actual salaries are presented as part of regular expense while 25% additional salaries expense shall be presented as special itemized deductions.

Question 8

Cost of Facilities Improvement for Disabled Persons

Answer 8

Private entities that improve or modify their 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 improvement or modifications