RR No. 7-2011: Prescribes the policies in the tax treatment of campaign contributions and expenditures

Key points

1. Exempt contributions. Campaign contributions are exempt from Income Tax only if used to cover the candidate’s expenditures for the electoral campaign.
2. Unutilized funds. Unutilized or excess campaign funds, meaning contributions net of campaign expenditures, are subject to Income Tax and must be included in the candidate’s taxable income in the Income Tax Return for the taxable year.
3. Statement of Expenditures. A candidate, winning or losing, who fails to file the Statement of Expenditures with the COMELEC required under the Omnibus Election Code cannot claim the expenditures as deductions. The entire amount of contributions is then directly subject to Income Tax.

Who is affected

• Candidates in elections, winning or losing