CHAPTER 7

Question 1

Gross Income as Defined in the Tax Code includes all income derived from whatever source. Enumerate the items which are included in gross income?

Answer 1

1. Compensation for services, in whatever form paid, including but not limited to fees, salaries, wages, commissions and similar item
2. Gross income derived from the conduct of trade or business or from the exercise of a profession
3. Gains derived from dealings in property
4. Interests
5. Rents
6. Royalties
7. Dividends
8. Annuities
9. Prizes and winnings
10. Pensions
11. Partner’s distributive share from the net income of a general professional partnership

Question 2

When is gross income included for tax purposes according to Section 44 of the Tax Code of 1997?

Answer 2

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).

Question 3

Means all remuneration for services performed by an employee for his employer under an employer-employee relationship, unless specifically excluded by the Code.

Answer 3

Compensation

Question 4

Means the period of services for which a payment of compensation is ordinarily made to an employee by his employer.

Answer 4

Payroll Period

Question 5

Is an individual performing services under an employer-employee relationship.

Answer 5

Employee

Question 6

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.

Answer 6

Employer-employee relationship

Question 7

means any person fir whom an individual performs or performed any service.

Answer 7

Employer

Question 8

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

Answer 8

Employer

Question 9

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.

Answer 9

Statutory Minimum Wage

Question 10

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.

Answer 10

Minimum Wage Earner

Question 11

It does not always come in the form of money or is always termed as such.

Answer 11

Compensation

Question 12

What is the term for compensation paid in forms other than money, such as stocks, bonds, or property?

Answer 12

Compensation paid in kind

Question 13

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.

Answer 13

Tips and gratuities

Question 14

It pay constitute compensation subject to withholding, except those provided.

Answer 14

Pensions, retirement and separation pay

Question 15

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.

Answer 15

Deductions made by employer from compensation of employee