Exclusions from Gross Income Flashcards
Exclusions from Gross Income
- Proceeds from life insurance policy
- Amount received by the insured as a return of premium
- Gifts, bequests, devices, or descents
- Compensation received for injuries or sickness
- Income exempt under treaties
- Retirement benefits, pensions, gratuities, etc
- Miscellaneous items
Miscellaneous items excluded
- Income in the Philippines of foreign government or foreign government-owned and controlled corporations
- Income of the government and its political subdivisions
- Prizes and awards in recognition of religious, charitable, scientific, educational, artistic, literary, or civic achievements
- Prizes and awards in athletic competitions
- Mandatory contributions to SSS, GSIS, PhilHealth, Pag-Ibig, and union dues
- Contributions to Personal Equity Retirement Account (PERA)
- PERA investment income and PERA distributions
- 13th month pay and other benefits not exceeding 90k
- Gains from sale of bonds, debentures, or certificate of indebtedness with maturity of more than 5 years
- Gains from redemption of shares in mutual funds
- Income derived from the sale of gold pursuant to RA7076 or the People Small-Scale Mining Act of 1991
Taxable return on capital
- Interest income from the unpaid balance of the proceeds of the policy
- Any excess amount received over the premiums paid by the insured upon surrender or maturity of the policy
- Gain realized by the insured from the assignment or sale of his insurance policy 4. Any excess of the proceeds received over the acquisition costs and premium payments by an assignee of a life insurance policy
Compensation on injuries and sickness
amounts received through health insurance, accident or under Workmen’s Compensation Acts as compensation for personal injuries or sickness, plus the amounts of damages received
Compensation on injuries and sickness
amounts received through health insurance, accident or under Workmen’s Compensation Acts as compensation for personal injuries or sickness, plus the amounts of damages received
Requisites of exemption (RPBP)
1-10-50-RPBP
Requisites of exemption in the absence of retirement plan
The retiring employee must be 60 years of age and served the employer for at least 5 years.
Requisite of exemption in separation and termination
- Must be due to job-threatening sickness, deaths, or other physical capability
- Must be beyond the control of the employee
The exemption of termination or separation does not extend to:
- Backwages or illegal deductions repaid by the employer upon the termination
- Terminal leave pay or the commutation of the accumulated unused leave credits
Income derived by the government and its political subdivisions from:
- any public utility
- exercise of essential government functions
exc: income from proprietary or commercial activities
Note: Government owned and controlled corporations (GOCCs) are generally taxable
Prizes and awards in recognition of religious, charitable, scientific, educational, artistic, literary or civic achievements are non-taxable ONLY IF:
- Without action on the recipient’s part to enter the contest or proceeding; and
- Not required to render future services as a condition to receive the prize or award
- must be UNILATERAL TRANSFER to be exempted
Prizes and awards in sport competitions granted to athletes
- In local or international competitions and tournaments;
- Whether held in the Philippines or abroad; and
- Sanctioned by their national sports competition
Prizes and awards in sport competitions granted to athletes
- In local or international competitions and tournaments;
- Whether held in the Philippines or abroad; and
- Sanctioned by their national sports competition
Contributions to GSIS, SSS, PhilHealth, PAG-IBIG, and union dues
Pertain to employee share and mandatory or compulsory monthly contributions. Voluntary contributions in excess of the mandatory monthly contribution are taxable.
