CHAPTER 7 Flashcards
Gross Income
Gross Income as Defined in the Tax Code includes all income derived from whatever source. Enumerate the items which are included in gross income?
- Compensation for services, in whatever form paid, including but not limited to fees, salaries, wages, commissions and similar item
- Gross income derived from the conduct of trade or business or from the exercise of a profession
- Gains derived from dealings in property
- Interests
- Rents
- Royalties
- Dividends
- Annuities
- Prizes and winnings
- Pensions
- Partner’s distributive share from the net income of a general professional partnership
When is gross income included for tax purposes according to Section 44 of the Tax Code of 1997?
Gross income should be included in the taxable year in which it is received by the taxpayer, unless another period is specified under permitted accounting methods (Section 43 of the Tax Code).
Means all remuneration for services performed by an employee for his employer under an employer-employee relationship, unless specifically excluded by the Code.
Compensation
Means the period of services for which a payment of compensation is ordinarily made to an employee by his employer.
Payroll Period
Is an individual performing services under an employer-employee relationship.
Employee
It exist when the person for whom services were performed has the right to control and direct the individual who performs the services, not only as to result to be accomplished by the work but also as to the details and means by which the result is accomplished.
Employer-employee relationship
means any person fir whom an individual performs or performed any service.
Employer
It is also defined as any person paying compensation on behalf of a non-resident alien individual, foreign partnership, or foreign corporation, who is not engaged in trade or business within the Philippines
Employer
refers to the rate fixed by the Regional Tripartite Wage and Productivity Board (RTWPB), as defined by the Bureau of Labor and Employment Statistics (BLES) of the DOLE.
Statutory Minimum Wage
refers to a worker in the private sector who is paid with a statutory minimum wage rates, or to an employee in the public sector with compensation income of not more than the statutory minimum wage rates in the non-agricultural sector where the worker/employee is assigned.
Minimum Wage Earner
It does not always come in the form of money or is always termed as such.
Compensation
What is the term for compensation paid in forms other than money, such as stocks, bonds, or property?
Compensation paid in kind
It is paid directly to an employee by a customer of the employer which are not accounted for by the employee to the employer are considered as taxable income but not subject to withholding.
Tips and gratuities
It pay constitute compensation subject to withholding, except those provided.
Pensions, retirement and separation pay
Any amount which is required by law to be deducted by the employer from the compensation of an employee including the withheld tax is considered as part of the employee’s compensation and is deemed to be paid to the employee as compensation at the time the deduction is made.
Deductions made by employer from compensation of employee
The term “compensation” includes remuneration for services performed by an employee of a nonresident alien individual, foreign partnership or foreign corporation, whether or not such alien individual or foreign entity is engaged in trade or business within the Philippines.
Remuneration for services as employee of a nonresident alien individual or foreign entity
Remuneration for services performed outside the Philippines by a resident citizen for a domestic or a resident foreign corporation or partnership, or for a non-resident corporation or partnership, or for a nonresident individual not engaged in trade or business in the Philippines shall be treated as compensation which is subject to tax.
Compensation for services performed outside the Philippines
Enumerate the 3 basis of Income of Farmers
Cash Basis
Accrual Basis
Crop Basis
True or False:
Non-resident foreign Corporations is taxed at 25% final tax.
False, Non-resident foreign corporation are subject to normal tax rates
True or False:
Non-resident alien not engaged in trade or business in the PH is taxed at 25% final tax.
True
True or False:
Interest income from long-term deposits or investments with a maturity period of not less than five years and in denominations of ₱10,000 or other approved amounts is exempt from income tax for individuals, except for non-resident aliens not engaged in trade or business in the Philippines.
True
