RMC No. 22-2009: Clarifies the allowable claims for personal and additional exemptions and optional standard deduction pursuant to RR Nos. 10-2008 and 16-2008, respectively

Key points

1. No full claim for 2008. RA No. 9504 was approved on June 17, 2008, so the increased personal and additional exemptions and the 40% OSD cannot be claimed in full for taxable year 2008. For individuals, the exemptions are apportioned under RR No. 10-2008, using the transitory amounts at the back of BIR Form 1701-July, 2008 (ENCS).
2. OSD of individuals. For January to June 2008, the OSD against business income is only 10% of gross income. For July 1, 2008 to December 31, 2008, it is a maximum of 40% of gross sales or gross receipts, net of returns, discounts and allowances.
3. Income not tied to a month. If the gross sales or receipts reflect total income for the whole year of 2008 and cannot be tied to a specific month, the total OSD is 10% of 50% of gross income plus 40% of 50% of gross sales or receipts.
4. OSD of corporations. For corporations that opt for the OSD, the 40% OSD based on gross income applies only from July 1, 2008. The prior period of the taxable year stays under itemized deduction.
5. Returns and amendments. These guidelines apply to 2008 ITRs not yet filed. Taxpayers who erred on returns already filed may amend and pay the deficiency basic Income Tax, without demand and with no penalties, under Section 204 (B) of the 1997 Tax Code, as amended.

Who is affected

• Individual taxpayers
• Corporations opting for the OSD
• Taxpayers who erred on 2008 returns already filed

Deadlines and effectivity

• Amendment of erroneous returns without penalties: until July 15, 2009
• OSD for individuals: 10% for January to June 2008; maximum 40% for July 1 to December 31, 2008