21-56 identification Flashcards
What is the total compensation received for services performed under an employer-employee relationship?
Compensation income
What is income derived from the exercise of a profession or trade?
Gross income from trade or business
What are payments made to the owner of intellectual property for its use?
Royalties
What is a share of profits distributed by a corporation to its shareholders?
Dividends
What are payments received from tenants for the use of property?
Rents
What are earnings from the sale of assets at a higher price than their purchase price?
Gains from dealings in property
What is the period during which compensation is ordinarily paid?
Payroll period
What is a partner’s share of the net income of a general professional partnership?
Partner’s distributive share
What is a payment made periodically to retirees as part of a pension plan?
Pensions
What is interest earned from financial investments?
Interest
What type of income are tips or gratuities paid directly to an employee?
Taxable income but not subject to withholding.
Who pays tips directly to employees?
Customers.
Tips not reported to the employer are considered as _______.
Taxable income.
What law governs the taxation of tips in the Philippines?
National Internal Revenue Code.
Define ‘gratuities’ in tax context.
Payments from customers as voluntary appreciation of services.
What type of tax applies to tips not subject to withholding?
Income tax.
What type of income includes tips or gratuities paid directly to an employee by a customer?
Taxable income.
Are tips or gratuities subject to withholding tax if paid directly to an employee?
No.
What is the tax treatment of tips or gratuities not accounted for by the employee to the employer?
Considered taxable income but not subject to withholding.
What is a monetary gift voluntarily given by a customer to an employee?
Gratuity
Is a service charge automatically included in the computation of tips or gratuities?
No.
What is the basis of taxation for tips in the Philippines?
Taxable income but not subject to withholding.
Are tips required to be declared in the employee’s income tax return?
Yes.
Can gratuities be considered part of regular compensation?
No.
Who pays withholding tax on gratuities?
Not applicable (not subject to withholding tax).
What documentation is required to account for employer-paid tips?
None, if tips are directly paid by customers.
What is the final tax rate imposed on dividends distributed to resident citizens, non-resident citizens, and resident aliens?
(10% final tax)
What is the tax rate for dividends received by a non-resident alien not engaged in business in the Philippines?
(25% final tax)
What is the tax rate applied to dividends distributed to a domestic corporation?
(Income tax exempt)
What is the law that governs the reduced tax rate for Non-Resident Foreign Corporations (NRFC) under specific conditions?
(CREATE Act)
What is the condition where a non-taxable stock dividend does not alter a stockholder’s proportionate interest in a corporation’s net assets?
(Non-taxable stock dividend)
What is the portion of an annuity payment that is taxable?
(The portion representing interest)
What is the final tax rate imposed on PCSO winnings exceeding PHP 10,000?
(20% final tax)
What is the location of income for dividends received from a domestic corporation?
(Within the Philippines)
What are tax refunds that are not considered taxable income?
(Philippine income tax)
What is the final tax rate applied to prizes and winnings from commercial contests if the amount is above PHP 10,000?
(20% final tax)
