Chapter 2 part 3 Flashcards
The following are ordinary assets:
Stock in trade of the taxpayer or other property of a kind
which would properly be included in the inventory of
the taxpayer if on hand at the close of taxable year.
Property used in trade or business subject to
depreciation
Real property held by the taxpayer primarily for sale to
customers in the ordinary course of trade or business.
Real property used in trade or business of the taxpayer.
it include all the property held by the taxpayer (whether or not connected with his trade or
business) not included in the definition of ordinary assets. Generally, assets not used or held for sale in the ordinary course of business are classified as capital
assets.
Capital assets
Shares of stock sold or disposed of through the local stock exchange are subject to what kind of tax?
PERCENTAGE TAX also known as “stock transaction tax.”
which is:
= 6/10 of 1% of GSP
Subject to CAPITAL GAINS TAX (CGT) pertain to sale of:
a. Shares of stock of a domestic corporation sold directly to a
buyer = 15% of capital gain
b. Sale of real properties located in the Philippines
CGT = 6% of which is higher between GSP (gross selling price) and
FMV (fair market value)
Subject to Basic Tax – examples:
a. Sale of Share of foreign corporations
b. Sale of real properties located abroad
c. Sale of other personal assets other than share of stock of domestic corporations
the family home of the individual taxpayer which refers
to his dwelling house including his family.
PRINCIPAL RESIDENCE
REQUISITES OF TAX EXEMPTION
- The proceeds are fully utilized in acquiring or constructing a new
principal residence within 18 calendar months from the date of
disposition. - The historical cost or adjusted basis of the real property sold or
disposed shall be carried over to the new principal residence built or
acquired. - The BIR shall have been duly notified by the taxpayer within 30 days
from the date of sale or disposition through a prescribed return of his
intention to avail of the tax exemption. - The tax exemption can only be availed of once every 10 years.
formula of Taxable Amount
Taxable Amount = (Unutilized Portion/Gross Selling Price) x Gross Selling Price or Fair Market Value at the time of sale whichever is higher
A method of collecting income tax in advance from the
recipient of income through the payor thereof, which is
constituted by lawas the withholding agent of
government.
Creditable Withholding Taxes
Husband and wife shall compute separately their
individual income tax based on their respective total
taxable income provided that if any income cannot be
definitely attributed to or identified as income
exclusively earned or realized by either of the spouse,
the same shall be divided equally between the spouses
for the purpose of determining their respective taxable
income.
Income tax due of Married Tax Payers
Benefits for Senior Citizen and PWDs:
20% discount and exemption from VAT on their purchase
of specified goods and services
P500 monthly social pension, for indigent senior citizens
Death benefit assistance
5% discount on utilities
Income tax exemption for minimum wage earners of for
SC/PWDs whose annual taxable income is not more than
250,000
a worker in the private sector paid the statutory
minimum wage. The rate is fixed by the Regional
Tripartite Wage and Productivity Board as defined by
the Bureau of Labor and Employment Statistics.
MINIMUM WAGE EARNER
MWE are exempt from income tax on:
- Minimum wage
- Holiday pay
- Overtime pay
- Night shift differential
- Hazard pay
FILING OF INCOME TAX RETURNS
BASIC TAX
➔ For Purely Compensation Income Earners
On or before April 15 of the succeeding year
➔ For Business Income Earners
The individual taxpayer is required to file a quarterly tax return ( May 15, Aug
15, Nov 15, and April 15)
FINAL WITHHOLDING TAX ON PASSIVE INCOME
Prior to 2018 - January to November – 10th day of the month
December – January 15 2018 – not later than the last day of the month
