21-56 identification

Question 1

What is the total compensation received for services performed under an employer-employee relationship?

Answer 1

Compensation income

Question 2

What is income derived from the exercise of a profession or trade?

Answer 2

Gross income from trade or business

Question 3

What are payments made to the owner of intellectual property for its use?

Answer 3

Royalties

Question 4

What is a share of profits distributed by a corporation to its shareholders?

Answer 4

Dividends

Question 5

What are payments received from tenants for the use of property?

Answer 5

Rents

Question 6

What are earnings from the sale of assets at a higher price than their purchase price?

Answer 6

Gains from dealings in property

Question 7

What is the period during which compensation is ordinarily paid?

Answer 7

Payroll period

Question 8

What is a partner’s share of the net income of a general professional partnership?

Answer 8

Partner’s distributive share

Question 9

What is a payment made periodically to retirees as part of a pension plan?

Answer 9

Pensions

Question 10

What is interest earned from financial investments?

Answer 10

Interest

Question 11

What type of income are tips or gratuities paid directly to an employee?

Answer 11

Taxable income but not subject to withholding.

Question 12

Who pays tips directly to employees?

Answer 12

Customers.

Question 13

Tips not reported to the employer are considered as _______.

Answer 13

Taxable income.

Question 14

What law governs the taxation of tips in the Philippines?

Answer 14

National Internal Revenue Code.

Question 15

Define ‘gratuities’ in tax context.

Answer 15

Payments from customers as voluntary appreciation of services.

Question 16

What type of tax applies to tips not subject to withholding?

Answer 16

Income tax.

Question 17

What type of income includes tips or gratuities paid directly to an employee by a customer?

Answer 17

Taxable income.

Question 18

Are tips or gratuities subject to withholding tax if paid directly to an employee?

Answer 18

No.

Question 19

What is the tax treatment of tips or gratuities not accounted for by the employee to the employer?

Answer 19

Considered taxable income but not subject to withholding.

Question 20

What is a monetary gift voluntarily given by a customer to an employee?

Answer 20

Gratuity

Question 21

Is a service charge automatically included in the computation of tips or gratuities?

Answer 21

No.

Question 22

What is the basis of taxation for tips in the Philippines?

Answer 22

Taxable income but not subject to withholding.

Question 23

Are tips required to be declared in the employee’s income tax return?

Answer 23

Yes.

Question 24

Can gratuities be considered part of regular compensation?

Answer 24

No.

Question 25

Who pays withholding tax on gratuities?

Answer 25

Not applicable (not subject to withholding tax).

Question 26

What documentation is required to account for employer-paid tips?

Answer 26

None, if tips are directly paid by customers.

Question 27

What is the final tax rate imposed on dividends distributed to resident citizens, non-resident citizens, and resident aliens?

Answer 27

(10% final tax)

Question 28

What is the tax rate for dividends received by a non-resident alien not engaged in business in the Philippines?

Answer 28

(25% final tax)

Question 29

What is the tax rate applied to dividends distributed to a domestic corporation?

Answer 29

(Income tax exempt)

Question 30

What is the law that governs the reduced tax rate for Non-Resident Foreign Corporations (NRFC) under specific conditions?

Answer 30

(CREATE Act)

Question 31

What is the condition where a non-taxable stock dividend does not alter a stockholder’s proportionate interest in a corporation’s net assets?

Answer 31

(Non-taxable stock dividend)

Question 32

What is the portion of an annuity payment that is taxable?

Answer 32

(The portion representing interest)

Question 33

What is the final tax rate imposed on PCSO winnings exceeding PHP 10,000?

Answer 33

(20% final tax)

Question 34

What is the location of income for dividends received from a domestic corporation?

Answer 34

(Within the Philippines)

Question 35

What are tax refunds that are not considered taxable income?

Answer 35

(Philippine income tax)

Question 36

What is the final tax rate applied to prizes and winnings from commercial contests if the amount is above PHP 10,000?

Answer 36

(20% final tax)