[Excercise 1-5] Multiple Choice Flashcards
All items of gross income, deductions, and personal exemptions, if any, are reported in one income tax return, and the tax is paid under a single set of income tax rates.
a. Global tax system
b. Schedular tax system
c. Semi-schedular system
d. Semi-global system
ANSWER: a. Global tax system
Theoretical justice means:
a. The tax law must be clear and concise.
b. Taxes must be based on the taxpayer’s ability to pay.
c. The law must be capable of proper enforcement.
d. The tax measure is convenient as to time and manner of payment.
ANSWER: b. Taxes must be based on the taxpayer’s ability to pay.
Taxation is legislative in nature, EXCEPT:
a. The tax power is primarily vested in Congress.
b. The tax power can be exercised by the local legislative body.
c. The exercise of tax power may be subject to guidelines and limitations as Congress may provide, consistent with the basic policy of local autonomy.
d. The tax law may be enacted by the local chief executive.
+ANSWER: d. The tax law may be enacted by the local chief executive.
ABC Colleges is a non-stock, non-profit educational institution run by the Archdiocese of Nueva Jacinta. It is occupying the following buildings:
Building 1 – Used by students for classroom purposes.
Building 2 – Used as a dormitory for students but also open to non-students.
Building 3 – Owned by Mr. Rent, leased to ABC Colleges, and serving as the administration building.
Which of the above buildings is exempt from real estate tax?
a. Buildings A and C
b. Buildings A and B
c. All of them
d. Building A only
ANSWER: d. Building A only
Tax exemption as distinguished from tax amnesty:
a. Freedom, immunity, or privilege from the burden of taxation to which others are subject.
b. General pardon on persons guilty of tax evasion.
c. Condones tax liabilities, penalties, as well as criminal or administrative penalties.
d. Waiver of the government’s right to collect past due and unpaid tax collectibles, giving tax evaders who wish to relent and are willing to reform a chance to do so.
ANSWER: a. Freedom, immunity, or privilege from the burden of taxation to which others are subject.
Not one of the purposes or objectives of taxation:
a. Reduction of social inequality
b. Protectionism
c. Promotion of general welfare
d. Expropriation
ANSWER: d. Expropriation
Mr. Kawanggawa donated cash of P500,000 to the Parish of St. Benedict.
a. Mr. Kawanggawa is liable to pay donor’s tax to the government if only 30% of the gift is used for religious purposes.
b. The church is liable to pay donor’s tax because the exemption of churches is limited only to property tax.
c. Churches are exempt from taxes; therefore, donations to them are tax-exempt.
d. The donation is exempt because it is an income for religious purposes.
ANSWER: c. Churches are exempt from taxes; therefore, donations to them are tax-exempt.
Fr. Dinero had the following activities during the week. Which of the following activities is subject to income tax?
a. Celebrates mass and collects alms from the faithful.
b. Solicits funds for the construction of the church.
c. Teaches religion at a university and collects his salary.
d. Sells Bibles to the public.
ANSWER: c. Teaches religion at a university and collects his salary.
“The City of Manila passed Ordinance No. 6537 making it unlawful for any person not a citizen of the Philippines to be employed within the city without first securing an employment permit.” What constitutional limitation is violated by this ordinance?
a. International comity
b. Territoriality
c. Due process of law
d. Public purpose
ANSWER: c. Due process of law
The Constitution exempts from taxation charitable institutions, churches, parsonages or convents appurtenant thereto, mosques, and non-profit cemeteries, and all lands, buildings, and improvements actually, directly, and exclusively used for religious, charitable, and educational purposes. Charity Hospital is a 150-bed hospital organized for charity patients. What tax will it be exempt from based on the above-quoted constitutional provision?
a. Income tax
b. Donor’s tax
c. Real property tax
d. Customs duties
ANSWER: c. Real property tax
Which of the following is NOT a tax under the National Internal Revenue Code?
a. Documentary stamp tax
b. Excise tax on breast augmentation
c. Community tax
d. Franchise tax
ANSWER: c. Community tax
Which of the following statements is erroneous?
a. Taxes are pecuniary in nature.
b. Taxes are enforced charges and contributions.
c. Taxes are levied by the executive branch of the government.
d. Taxes are imposed on persons and property within the territorial jurisdiction of a state.
ANSWER: c. Taxes are levied by the executive branch of the government.
Which of the following is NOT a nature of the power of taxation?
a. Legislative in nature
b. Civil and not political in character
c. Tax laws are penal in nature
d. It is an attribute of sovereignty
ANSWER: c. Tax laws are penal in nature
The Congress may, by law, delegate the legislative power to the President to fix within specified limits the levy, EXCEPT:
a. Tariff rates
b. Tonnage and wharfage dues
c. Import and export quotas
d. Arrastre charges
ANSWER: d. Arrastre charges
The Municipality of Monte Cristo has a ten (10) hectare cemetery consisting of four (4) different cemeteries which are differently owned. Which of the following is subject to real estate tax?
a. Cementerio Municipal del Monte Cristo – a government cemetery owned by the municipal government, established for the purpose of using it as a burial ground for paupers in the municipality.
b. Monte Cristo Catholic Cemetery – owned by the Catholic Church; payments are remitted to the Catholic Church and used for the improvement of the cemetery.
c. Better Living Memorial Park – owned by a corporation where dividends are distributed to the shareholders at the end of the year.
d. Quita-Quita Memorial Park – owned by an association consisting of one hundred (100) different families; each family owns several square meters of lot, and not a single portion is held for sale to other members or non-members of the association.
ANSWER: c. Better Living Memorial Park
The Bicol School of Business and Arts, a private educational institution offering primary, secondary, and tertiary education, is registered with and accredited by the Department of Education (DepEd) and the Commission on Higher Education (CHED).
Which of the following is exempt from tax? What kind of tax?
a. The importation of laboratory equipment – from customs duties.
b. The school building being rented by the school – from real property tax.
c. A portion of the school building being leased to a fast-food chain – from real property tax.
d. The income from operation – from income tax.
b. The school building being rented by the school – from real property tax.
The Bicol School of Business and Arts, a private educational institution offering primary, secondary, and tertiary education, is registered with and accredited by the Department of Education (DepEd) and the Commission on Higher Education (CHED).
Assuming that the school is a non-stock, non-profit educational institution, which of the following is subject to tax? What kind of tax?
a. The school building owned by the school – from real estate tax.
b. The school building being rented by the school – from real property tax.
c. A portion of the school building being leased to a fast-food chain – from real property tax.
d. The income from operation – from income tax.
ANSWER: c. A portion of the school building being leased to a fast-food chain – from real property tax.
Congressman Luis R. Villafuerte and Senator Mar Roxas sponsored a bill in the House of Representatives and the Senate, respectively, subjecting the sale of petroleum and petroleum products to a zero rate (0%) of value-added tax. Which of the following is correct?
a. The Senate bill should be discussed ahead of the House bill.
b. The Senate and House bills should be discussed at the same time.
c. The House bill should be discussed ahead of the Senate bill.
d. No priority; either one can be discussed ahead of the other.
ANSWER: c. The House bill should be discussed ahead of the Senate bill.
Which of the following questions is answerable by “Yes”?
a. May Congress, under the 1987 Constitution, abolish the power to tax of local government units?
b. May a tax be validly imposed in the exercise of police power and not of the power to tax?
c. Is indirect duplicate taxation a valid defense against the legality of a tax measure?
d. When an item of income is taxed in the Philippines and the same income is taxed in another country, is there a case of direct double taxation?
ANSWER: b. May a tax be validly imposed in the exercise of police power and not of the power to tax?
Not a usual method of avoiding the occurrence of double taxation:
a. Allowance of tax credit for foreign taxes paid.
b. Allowance of deduction for foreign taxes paid.
c. Reporting an income which is lower than the correct amount.
d. Reduction of the Philippine tax rate.
ANSWER: c. Reporting an income which is lower than the correct amount.
