#AskTheTaxWhiz: Is organizing charity events taxable?
I have been organizing charity events with my close friends for many years. This is a personal initiative and not through any non-profit organization. Is it taxable? One of my lawyer friends advised me to register a foundation to do this legally and for tax exemption purposes. Is that correct?
Yes. Any form of gift or donation is subject to donor's tax. If the donation is given to a stranger (a person who is not a brother, sister, spouse, or relative by consanguinity up to fourth degree), it will be subject to 30% donor's tax.
Yes. If this is an advocacy you want to pursue, you may opt to set up your own foundation. Otherwise, you may course your donation to your chosen, accredited non-profit organization or government agency to avoid donor's tax.
Can I claim my charitable contributions or donations as deductible expense to reduce my taxable income? For sure there will be substantiation requirements. Any Bureau of Internal Revenue (BIR) form I need to file for this?
Yes. BIR recently issued revenue memorandum circular (RMC 86-2014) dated December 5, 2014 to reiterate the substantiation requirements in claiming charitable contributions or donations as deductible expense:
Actual receipt by the accredited non-stock, non-profit corporation/non-government organization of the donation or contribution and the date of receipt thereof, and
The amount of the charitable contribution or donation, if in cash; if property, whether real or personal, the acquisition cost of the real property
You need to file BIR Form 2322 or the Certificate of Donation following the format prescribed.
I am a recipient of the Metrobank Scholarship. I learned from the Metrobank ASSET (Alumni Scholars for Service, Excellence and Transformation), our alumni association about a new project called "Iskolar ng mga Iskolar" where we can sponsor our own scholars from selected public elementary schools in Manila, by giving a P25 ($0.56*) daily allowance. I am currently working as a branch manager. If I decide to sponsor a student through Metrobank ASSET's project, can I claim it to reduce my withholding taxes as an employee?
No. Although this is a noble initiative and your generosity is needed, our tax code does not provide allowable deductions to reduce withholding taxes on compensation.
Nonetheless, if you want to help the "Iskolar ng mga Iskolar" project, consider this as your way of paying it forward.
For more information, you may contact your Metrobank ASSET officers or Metrobank Foundation.
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Mon Abrea is a former BIR examiner and an advocate of genuine tax reform. He serves as chief strategy officer of the country’s first social consulting enterprise, the Abrea Consulting Group, which offers strategic finance and tax advisory services to businesses and professionals. Mon's tax handbook, Got a Question About Taxes? Ask the Tax Whiz! is now available in bookstores nationwide. Follow Mon on Twitter: @askthetaxwhiz or visit his group’s Facebook page. You may also email him at firstname.lastname@example.org.
*$1 = P44.77
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