It’s Taxable – BIR
Revenue Memorandum Circular No. 30-2016 from the Bureau of Internal Revenue (BIR) was issued on March 14, 2016 reminding electoral candidates about their tax obligations.
The Circular reminded candidates. among other things (registration with BIR, issuance of official receipts, withholding taxes), that campaign donations were tax free only because they are designed for electoral campaigns, not personal use or enrichment. What makes them tax free is their use for campaign expenses of candidates.
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Thus, with excess or unused campaign money from donations, Revenue Regulations No. 07-2011 says these funds are subject to taxation and must be part of a candidate’s taxable income reflected in their income tax return for the taxable year.
Marissa Cabreros, assistant commissioner for Legal Service of the BIR, says leftover campaign funds should be returned to avoid being taxed for them. But if candidates decide to keep them, they become taxable as income, Cabreros explained.
“So dapat i-declare nila iyan as windfall, so subject sa income [tax] (So they should declare it as windfall, so it is subject to income [tax]).”
Revenue regulations specify that candidates, electoral or political parties, and even party-list groups who benefit from “taxable contributions” must file the right income tax return and pay the right amount.
Candidates who are self-employed should declare or do the same thing for the last quarter of June 30, 2016, or before Aug. 15, 2016.
For those who are purely compensation income earners, income tax amount must be declared for taxable year 2016 before April 15, 2017.
For political parties and party-lists, income tax shall be reported as domestic corporations do with when filing returns and paying their taxes. Taxable income must be declared for the last quarter of June 30, 2016, or before Aug. 29, 2016.
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Compensation income earners must then declare their excess campaign funds as part of their taxable income when they file their income tax returns on or before April 15, 2017.
This applies to Senators Gatchalian and Leila de Lima. The latter reported P677,794.70 extra campaign money, which is the same amount reflected in her SALN as additional cash in June 30, 2016. This is identified under De Lima’s personal properties as “balance from election contributions received less election expenditures as reported.”
Source: (pcij.org)
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