Suspension of Implementation of Annual Information Return

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Good news for income tax return preparers! The Bureau of Internal Revenue, according a latest news from abs-cbnnews.com, issued Revenue Memorandum Circular (RMC) No. 9-2014 suspending the implementation of Annual Information Return (AIR) for the third time!  Supplementary Information will be mandatory starting with calendar year 2014.

RMC No. 9-2014 also states that in any returns filed with the BIR, individual tax payers are given the option to use either (a) their community tax certificate (b) passport or (c) driver’s license.

The Annual Information Return

If you remember, AIR (BIR Form No. 1705) is for Individual Taxpayers, Estates and Trusts as mandated by Revenue Regulations No. 2-2011, supposedly starting taxable year 2010. The AIR requires individuals, estate and trusts to report:

  1. passive income
  2. gains from sale/exchange of real properties
  3. properties received through gifts, bequests, and devises
  4. income from other sources other than those reported in the income tax return and
  5. payment to heirs in the case of estates and trust (engaged in trade and business)

AIR is required to be filed with the income tax return.  This AIR, when no income tax return is filed, shall be filed in triplicate copies by the following:

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(a)    An individual with respect to pure compensation income, as defined in Section  32(A)(1), derived from sources within the Philippines, the income tax on which has been correctly withheld under the provisions of Section 79 of the Tax Code, as amended, whose annual taxable income exceeds Five Hundred Thousand Pesos (Php 500,000); Provided, That an individual deriving compensation concurrently from two or more employers at any time during the taxable year shall file an income tax return;

(b)    Individuals, estates and trusts whose sole income has been subjected to final withholding tax under Section 57(A) of the Tax Code, as amended, with aggregate final tax withheld exceeding One Hundred Twenty Five Thousand Pesos (Php 125,000) annually, whether or not remitted to the BIR: and

(c)    Individuals  whose  sole  income  is  exempt  from  income tax  and  whose  total  annual  income  (exempt)  exceeds Five  Hundred  Thousand  Pesos  (Php 500,000.00)

Filing Date

File with ITR
The return shall be filed with the Revenue District Office (RDO) where the individual, including estates and trusts, is required to register or where the individual has his legal residence or place of business on or before April 15 of each year covering the income for the preceding taxable year.

File AIR Only
The return shall be filed with the Revenue District Office (RDO) where the individual, including estates and trusts, is required to register or where the individual has his legal residence or place of business on or before May 15 of each year covering the income for the preceding taxable year.

Related Article

The article written at abs-cbnnews.com reads as follows:

MANILA, Philippines – The Bureau of Internal Revenue won’t be implementing its controversial memorandum circular requiring taxpayers to provide detailed income information when they file their income tax returns this year.

On Tuesday, the BIR issued Revenue Memorandum Circular 9-2014 which suspended the implementation of the Annual Information Return (AIR) for a third time.

With the AIR, taxpayers would be required to disclose all other income such as interest on bank deposits, prize winnings, real estate properties and sale of shares of stocks, which are covered by the final withholding tax system.

The AIR is a supplemental information similar to government employees’ Statement of Assets, Liabilities and Net Worth (SALN).

The AIR had earlier been opposed by several sectors and some lawmakers, who claimed it would violate an individual’s right to privacy.

BIR Commissioner Kim S. Jacinto-Henares said taxpayers’ filing of AIR would be optional again for taxable year 2013.

However, she said the AIR, which has been suspended since 2010, will be mandatory for taxpayers earning more than P500,000 a year, starting 2015.

“The supplemental information, once it becomes mandatory, will help us to easily determine if taxpayers are paying correct taxes to the government,” Henares said.

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Disclaimer: Opinions expressed in this article are that of the author and information provided are for general conceptual guidance for public information and are not substitute for expert advice. Contact support@philcpa.org for more information and if you want to avail professional services. Find us on Facebook!



Orlando Calundan is a CPA who has exposures in FS audit of entities in various industries such as real estate, food/restaurants, manufacturing, service organizations and BPOs, automotive, holding/investment companies and more. He also has exposure on internal audit engagements.

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