DEDUCTIONS

General requisites
 Ordinary and necessary expenses to the trade/business/profession of the taxpayer
 Not contrary to law, morals, public order, and public policy
 Substantiated
 Paid/incurred within the taxable year
 Subjected to withholding tax, if applicable

Deduction Nature Notes

Expenses (Ordinary and necessary trade, Salaries, wages, and other forms of 1. All events test
business or professional) compensation 2. Must be actually performed
3. Subjected to withholding tax on
compensation or fringe benefits tax,
whichever applicable (Note: if
included as gross income of
employee, subject to withholding tax)
4. Nondeductible: premiums of
insurance for employee if beneficiary
is employer (treated as exclusion
from gross income upon pay-out)
Travel expenses 1. Includes transportation expenses and
meals and lodging paid by the
employer
2. It also includes laundry and other
incidental expenses that are directly
connected with the trip
3. If granted to employee in the form of
allowances (not subject to
liquidation), deductible as
salaries/allowances (not as travel
expenses)
4. Substantiation: receipts must be
issued to the taxpayer
Rentals and other payments 1. Of property to which the taxpayer
 has not taken or is not taking title or
in which he has no equity other than
that of a lessee, user or possessor
2. Includes other payments to the lessor
(taxes and insurance shouldered