THE NEW TAX EXEMPTIONS (RA 9504)
It was on June 17, 2008 the PGMA signed into law the granting of additional tax relief primarily to individual - either those who were earning purely compensation income or those who were in the practice of their profession and sole proprietors. REPUBLIC ACT 9504 became effective as a law on July 6, 2008. The essence of the law was initially to relieve minimum wage earners from income taxation of both employees of the government and private sector. It would effectively not only cover the basic pay but also would exclude from taxation the holiday pay, overtime pay, night shift differential and hazard pay. Minimum wage earners, as identified in REPUBLIC ACT 9504, would mean those employees who worked in the private sector who were paid at the salary rate fixed by the Regional Tripartite Wages and Productivity Board of a region. Those in the public sector, a minimum wage earner would mean employees earning not more than the statutory minimum wage in the non-agricultural sector. However, those employees receiving other income, even if with a salary at the minimum wage, are excluded in the definition of minimum wage earners. REPUBLIC ACT 9504 was better expanded to then increase the personal and additional allowable exemptions of individual taxpayers, effectively easing the burden of *taxation* on those employees earning beyond minimum wage. The law provided that all individual taxpayers, regardless of tax status (Single, Head of the Family or Married) were given a personal allowable exemption of Php.50,000.00 while an additional allowable exemption of Php.25,000.00 for qualified dependents up to a maximum of four.
Unlike the previous increases in tax exemptions though, the BIR deemed it fit that these NEW TAX EXEMPTIONS would be effected on a pro-rata basis which would mean July 2008. It would therefore mean that the Personal and Additonal Allowable Deductions are to be applied only by half for 2008.
