Sangalang, Santiano, Santos, Say 3MB

RA 9504: Sec 4
RA 8424: Sec 35 C-D & Sec 36
RA 9504 Sec 4
Also known as Sec 35 A & B of Republic Act 8424

Republic Act 8424: Tax Reform Act of

1997
Sec 35: Allowance of Personal Exemption for
Individual Taxpayer
A. In General
1. For purposes of determining the tax
provided in Section 24(A) of this title,
there shall be allowed a basic personal
exemption amounting to Fifty thousand
pesos (P50,000) for each individual
taxpayer.
2. In the case of married individual where
only one of the spouses is deriving gross
income, only such spouse shall be
allowed the personal exemption.
B. Additional Exemption for Dependents
1. There shall be allowed an additional
exemption of twenty-five thousand
pesos (25,000) for each dependent not
exceeding four (4)
2. In the case of married individual where
only one of the spouses is deriving gross
income, only such spouse shall be
allowed the personal exemption.
3. In the case of legally separated spouses,
additional exemptions may be claimed
only by the spouse who has custody of
the child or children
the total amount of additional
exemptions that may be claimed by
both shall not exceed the
maximum additional exemptions
herein allowed
C. Change of Status
1. If the taxpayer marries or should have
additional dependent(s) as defined
above during the taxable year, the

What is a dependent?
A legitimate, illegitimate or legally adopted child
chiefly dependent upon and living with the
taxpayer; not more than 21 years old, unmarried,
not gainfully employed, incapable of self-support
(due to mental/physical defect regardless of age)
taxpayer may claim the corresponding
additional exemption, as the case may
be, in full for such year.
2. If the taxpayer dies during the taxable
year, his estate may still claim the
personal and additional exemptions for
himself and his dependent(s) as if he
died at the close of such year.
3. If the spouse or any of the dependents
dies or if any of such dependents
marries, becomes twenty-one (21) years
old or becomes gainfully employed
during the taxable year, the taxpayer
may still claim the same exemptions as if
the spouse or any of the dependents
died, or as if such dependents married,
became twenty-one (21) years old or
became gainfully employed at the close
of such year.
D. Personal
Exemption
Allowable
to
Nonresident Alien Individual
1. A nonresident alien individual engaged in
trade, business or in the exercise of a
profession in the Philippines shall be
entitled to a personal exemption in the
amount equal to the exemptions allowed
in the income tax law in the country of
which he is a subject - or citizen, to
citizens of the Philippines not residing in
such country, not to exceed the amount
fixed in this Section as exemption for
citizens or resident of the Philippines
2. Should file a true and accurate return of
the total income received by him from all
sources in the Philippines, as required by
this Title
3. In the case of married individuals where
only one of the spouses is deriving gross

income, only such spouse shall be

allowed the personal exemption.
Sec 36: Items Not Deductible
A. General Rule: In computing net income, no
deduction shall in any case be allowed in
respect to:
1. Personal, living or family expenses
2. Any amount paid out for new buildings or
for permanent improvements, or
betterments made to increase the value
of any property or estate
This Subsection shall not apply to intangible
drilling and development costs incurred in
petroleum operations which are deductible
under Subsection (G) (1) of Section 34 of this
Code.

3. Any amount expended in restoring

property or in making good the
exhaustion thereof for which an
allowance is or has been made
4. Premiums paid on any life insurance
policy covering the life of any officer or
employee, or of any person financially
interested in any trade or business carried
on by the taxpayer, individual or
corporate, when the taxpayer is directly
or indirectly a beneficiary under such
policy
B. Losses from Sales or Exchanges of Property
In computing net income, no deductions shall
in any case be allowed in respect of losses from
sales or exchanges of property directly or
indirectly:
1. Between members of a family. For
purposes of this paragraph, the family of
an individual shall include only his brothers
and sisters (whether by the whole or halfblood), spouse, ancestors, and lineal
descendants

2. Except in the case of distributions in

liquidation, between an individual and
corporation more than fifty percent (50%)
in value of the outstanding stock of which
is owned, directly or indirectly, by or for
such individual
3. Except in the case of distributions in
liquidation, between two corporations
more than fifty percent (50%) in value of
the outstanding stock of which is owned,
directly or indirectly, by or for the same
individual if either one of such
corporations, with respect to the taxable
year of the corporation preceding the date
of the sale of exchange was under the law
applicable to such taxable year, a personal
holding company or a foreign personal
holding company
4. Between the grantor and a fiduciary of any
trust
5. Between the fiduciary of and the fiduciary
of a trust and the fiduciary of another trust
if the same person is a grantor with
respect to each trust
6. Between a fiduciary of a trust and
beneficiary of such trust