HOUSE OF REPRESENTATIVES
RECEIVED

0

First Regular Session

183

House Bill No.

Introduced by REPRESENTATIVE ERIC L. OLIVAREZ

EXPLANATORY NOTE

The National Internal Revenue Code provides certain tax
exemptions to income-earning individuals. The wisdom of the grant of
such exemption is to avoid unreasonably burdening a person who has
to provide to a number of household members who are unable to
support themselves just yet either because they are still presumed to
be studying and therefore unable to work for self-support, and/or
because the person being sustained by the income earner is physically
or mentally restrained from providing for himself. The State
understands that an income-earner has an obligation first and
foremost to his/her family and the latter supports or assists the former
by imposing lesser taxes accordingly.

However, in light of the K-12 Curriculum recently passed and
implemented in the country, wherein two (2) more year levels were
added to our educational system, a person affected by the said law is
now expected to complete his/her education at twenty-three (23) years
old on average, instead of twenty-one. As such, the income earners in
the family would have to sustain the education of their children or


immediate relatives (i.e. brother/sister) a little bit longer, or to be more
specific, two years longer than before,

Because of this, it is only proper to amend the section/s of the
National Internal Revenue Code which provide/s for the age limitation
of household members that may qualify as dependents for purposes of
availing tax exemptions, if only to avoid defeating the purpose and
wisdom of the above-cited specific provision of the National Internal
Revenue Code.

It is only for this reason that this Bill is being sought to be
passed.

enc. OW,

ERIC OLIVAREZ


Republic of the Philippines
HOUSE OF REPRESENTATIVES
Constitution Hills, Quezon City

SEVENTEENTH CONGRESS
First Regular Session

House Bill No. 183

Introduced by REPRESENTATIVE ERIC L. OLIVAREZ
oS

AN ACT INCREASING THE AGE BRACKET OF THE HOUSEHOLD
MEMBERS CONSIDERED AS DEPENDENTS OF A TAXPAYER FROM
21 TO 23 YEARS OLD, AND FOR THAT PURPOSE, AMENDING
SECTION 35, ITEMS (A) AND (B) OF THE NATIONAL INTERNAL
REVENUE CODE

SECTION 1, Short Title. This Act shall be known as an “Act
Increasing the Age Bracket of Taxpayers’ Dependents”.

SECTION 2. Section 35, A and B of the National Internal Revenue
Code as amended by RA 9504 states:

SEC. 35. Allowance of Personal Exemption for
Individual Taxpayer. -

"(A) In General. - For purposes of determining the
tax provided in Section 24(A) of this title, there shall be
allowed a basic personal exemption amounting to Fifty
thousand pesos (P50,000) for each individual taxpayer.


In the case of married individual where only one of
the spouses is deriving gross income, only such spouse
shall be allowed the personal exemption.

(B) Additional Exemption for Dependents. - There
shall be allowed an additional exemption of Twenty-five
thousand pesos (25,000) for each dependent not
exceeding four (4).

The additional exemption for dependents shall be
claimed by only one of the spouses in the case of
married individuals.

In the case of legally separated spouses, additional
exemptions may be claimed only by the spouse who has
custody of the child or children:

Provided, That the total amount of additional
exemptions that may be claimed by both shall not
exceed the maximum additional exemptions herein
allowed.

For purposes of this Subsection, a “dependent"
means a legitimate, illegitimate or legally adopted child
chiefly dependent upon and living with the taxpayer if
such dependent is not more than twenty-one (21) years
of age, unmarried and not gainfully employed or if such
dependent, regardless of age, is incapable of self-
support because of mental or physical defect.”

For purposes of this paragraph the term “Head of
Family” means an unmarried or legally separated man
or woman with one or both parents, or with one or more
brothers or sisters, or with one or more legitimate
recognized natural or legally adopted children living with
and dependent upon him for their chief support, where


such brothers or sisters or children are not more than
twenty-three (23) years of age, unmarried and not
gainfully employed or where such children, brothers or
sisters, regardless of age are incapable of self-support
because of mental or physical defect.

(2) Additional exemption

(A) Taxpayers with dependents - A married
individual or head of a family shall be allowed an
additional exemption of five thousand pesos (P 5,000) for
each dependent: Provided, that the total number of
dependents for which additional exemptions may be
claimed shall not exceed four dependents: Provided
further, that the additional exemption for dependents
shall be claimed by only one of the spouses in case of
married individuals (As amended by R.A. 7497)

In case of legally separated spouses, additional
exemptions may be claimed only by the spouse who was
awarded custody of the child or children: Provided, that
the total amount of addition exemptions that may be
claimed by both shall not exceed the maximum
additional exemptions herein allowed.

For purposes of this paragraph, a dependent
means a legitimate, recognized natural or legally
adopted child chiefly dependent upon and living with
the taxpayer if such dependent is not more than
twenty-three (23) years of age, unmarried and not
gainfully employed or if such dependent, regardless of
age, is incapable of self-support because of mental or
physical defect.


(B) Tax payers with gross compensation income
not exceeding P20,000 — A special additional exemption
of Four thousand pesos (P4,000) shall be allowed if the
gross income of a single, married, or legally separated
individual, or head of family does not exceed the
aggregate amount of P20,000: Provided, That in case
married individual elect to compute their income tax
separately, the spouse claiming the additional
exemption for dependent children shall be entitled to the
special additional exemption of P4,000.

(3) Change of status - If the taxpayer married or
should have additional dependents as defined above
during the taxable year, the taxpayer may claim the
corresponding personal and additional exemptions, as
the case may be, in full for such year.

If the taxpayer should die during the taxable year,
his estate may still claim the personal and additional
exemptions for himself and his dependents as if he died
at the close of such year.

If the spouse or any of the dependents should die
or if any of such dependents becomes twenty-three (23)
years old during the taxable year, the taxpayer may still
claim the same exemptions as if they died, or if such
dependents become twenty-three (23) years old at the
close of such year.

SECTION 3. Repealing Clause. All laws, presidential decrees,
letters of instructions, executive orders, rules and regulations insofar
as they are inconsistent with this act, are hereby repealed or amended
as the case may be.


SECTION 5S. Effectivity Clause. This Act shall take effect fifteen
(15) days after its complete publication in at least three (3) newspapers
of general circulation.

APPROVED.