This paper discusses the taxation of election-related contributions and expenditures.
Contributions and expenditures are considered election-related when given by the donor and spent by a candidate during the campaign period. However, there are instances where campaign contribution is not fully utilized by a candidate for campaign purposes. Although, the law and jurisprudence are silent on whether or not the unutilized contributions should be returned to the donor, Revenue Regulations (RR) No. 7-20119 clarified the treatment of these excess campaign funds for tax purposes, that is, unutilized/excess campaign funds, or campaign contributions net of the candidate’s campaign expenditures, shall be subject to income tax and, as such, must be included in the candidate’s taxable income as stated in his/her income tax return filed for the subject taxable year.