Are losses due to typhoons deductible?

Did you know that casualty losses (on properties used in business) may be deducted as a valid expense from the gross income? To be considered valid, of course, it has to comply with the BIR requirements.

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In light of the recent typhoons which struck and devastated the different parts of the country, most Filipinos and businesses are faced with tremendous losses to properties, infrastructures, inventories, livestock, and worst lives.

Casualty losses is defined by the BIR regulations as a complete or partial destruction of property resulting from an identifiable event of a sudden, unexpected, or unusual nature. Our Tax Code allows the deduction of casualty losses from damage to or loss of property used in business, to the extent that these are not compensated for by insurance or other forms of indemnity, and subject to compliance with certain requirements under Revenue Memorandum Order (RMO) No. 31-09.

Under the said RMO, within 45 days from the date of the event causing the loss, a Sworn Declaration, together with other proof of loss, must be filed with the nearest BIR RDO. Failure to submit such documentary requirements within the prescribed period may result in the disallowance of the loss claimed.

Considering that most of us are still recovering from the aftermath of the typhoons, complying to these requirements may be burdensome. Burdensome though it may be, taxpayers should take advantage of this tax relief, especially that under the Bayanihan to Recover as One Act, losses incurred from 2020 until 2021 may be carried over as deduction in the next five (5) years.

So, let’s try to pick up ourselves from 2020’s disasters and pray that the rest of the year will be better as we celebrate Christmas.

#TaxBreak with #VPA