Nature of tax exemption

Tax exemption is a grant of immunity to particular persons or corporations from a tax. In short, the taxpayer is impliedly or expressly rendered free by law.

A tax exemption is personal. It covers only the grantee and extends to no one else. It cannot be transferred or assigned.

A tax exemption is strictly construed against the taxpayer. It is a derogation from the lifeblood doctrine; as a result of this, it cannot be liberally construed in favor of the taxpayer. Taxation is the general rule and exemption is the exception.

Tax exemptions are never presumed except when it comes to the government because it is not usual for the government to tax itself. There are also traditionally-exempt entities that enjoy presumption of untaxability.