Last Updated on February 25, 2022 by Marie Bautista

If you are a political candidate in the Philippines, what would you do with excess campaign fund?
Manila Mayor and presidential aspirant Francisco “Isko” M. Domagoso disclosed in an interview that he opted to keep the P50 million excess campaign funds, which he got during his senatorial bid in 2016, although he assured that he paid P9.7 million to BIR as tax for the excess campaign fund.
Did he do the right thing?
Here is what your obligation is to the Bureau of Internal Revenue should you run for office and end up with excess campaign funds.
Campaign Contributions
In the course of an election period, various contributions are given to candidates for the purpose of influencing the results of the elections. Such campaign contributions to any candidate, be it in cash or in kind, when reported to the Commission on Elections, are exempt from the payment of donor’s tax (Section 13, Republic Act 7166).
However, there are instances when these campaign contributions are not fully utilized by a candidate for campaign purposes. The following are clarifications on the tax treatment of these excess campaign funds:
1. As a general rule, campaign contributions are not included in the taxable income of the candidate to whom they were given.
Why?
This is because these campaign contributions were given not for the personal use of the concerned political candidate. These campaign contributions’ purpose is to use them for his campaign.
Therefore, to be considered as exempt from income tax, these campaign contributions must have been used to cover a candidate’s expenditure for his campaign.
2. What about unutilized / excess campaign funds?
Excess campaign funds (Campaign contributions net of the candidate’s campaign expenditures ) shall be considered as SUBJECT TO INCOME TAX.
Since such excess campaign funds are subject to income tax, this must be included in the candidate’s taxable income and declared in his Income Tax Return (ITR) filed for the subject taxable year.
This was what the Manila Mayor claimed he did. He did the right thing by declaring the excess campaign funds as taxable income and paying the tax due thereon.
3. What if candidate FAILS to file with the Commision on Elections (COMELEC) the appropriate Statement of Expenditures required under the Omnibus Election Code?
Any candidate – winning or losing – who fails to file with the COMELEC the required Statement of Expenditures SHALL BE AUTOMATICALLY PRECLUDED FROM CLAIMING such expenditures as deductions from his campaign contributions.
The ENTIRE AMOUNT OF such campaign contributions shall be considered as DIRECTLY SUBJECT TO INCOME TAX.

Hi, I’m Marie! I am a Certified Public Accountant by profession with an MBA Degree. A Tax Maven. I have worked with the country’s premier tax collecting agency for years. If you have any tax-related Qs, shoot away and I will answer you in a jiff!)