Individuals

Question 1

Non Resident Aliens (NRA) are taxable within and without. True or False?

Answer 1

False
- Only RC
- NRC, RA, NRA → within

Question 2

How many days to determine if RC or NRC?

Answer 2

183 days (at least)

Question 3

How many days to determine if RA or NRA?

Answer 3

180 days (more than)
- aggregate, no need to be continuous

Question 4

I have a restaurant business. I also earn from being a CPA. I am considered as mixed income earner. True or False?

Answer 4

False
- Purely Compensation → employer-employee
- Self - Employed → profession, business or trade
- Mixed Income → both

Question 5

8% option is in lieu of regular income tax and percentage tax
- Irrevocable availment at the start of the year (1Q)

A corporation can avail of the 8% option. True or False?

Answer 5

False (for individuals only)

Question 6

8% option is in lieu of regular income tax and percentage tax
- Irrevocable availment at the start of the year (1Q)

Only self-employed and mixed income earner can avail of the 8% option. True or False?

Answer 6

True (X compensation)

Question 7

8% option is in lieu of regular income tax and percentage tax
- Irrevocable availment at the start of the year (1Q)

One with a GSR of more than 3M or is VAT-registered can avail of the 8% option. True or False?

Answer 7

False (must be less than 3M or must not be VAT-registered)

Question 8

8% option is in lieu of regular income tax and percentage tax
- Irrevocable availment at the start of the year (1Q)

Partners of a GPP can choose to avail the 8% option. True or False?

Answer 8

False

Question 9

8% option is in lieu of regular income tax and percentage tax
- Irrevocable availment at the start of the year (1Q)

Those subject to other percentage taxes (BICAP FLOW) cannot avail the 8% option. True or False?

Answer 9

True

Question 10

How to compute for the tax due of purely compensation?

Answer 10

Graduated Table

Question 11

How to compute for the tax due of self-employed / mixed earner?

Answer 11

If GSR more than 3M → Graduated Table
If GSR less than 3M → Graduated Table OR 8% tax

Question 12

Formula
- 8%, Self-Employed

Answer 12

GSR + NOI (RIT) less 250K

Question 13

Formula
- 8%, Mixed Earner

Answer 13

GSR + NOI (RIT)
- no more 250K deduction (use graduated table for compensation income)

Question 14

Final Income Tax (RPW ID ITR)
- must be within PH
- no need to file ITR

Answer 14

Royalties
Prizes
Winnings
Interest
Dividend
Infomer’s Tax Reward

Question 15

FWT Rate
- Royalties (General and LBM)

Answer 15

20% → General
10% → LBM (Literary, Books, Music)

Question 16

FWT Rate
- Prizes (General and ≤ 10,000)

Answer 16

20% → General
RIT → if ≤ 10,000

If 10,000 → RIT
If 10,001 → 20%

Question 17

Exempt Prizes
- I saw that there is SOASP. I applied for it. Is it exempt?

Answer 17

NO
Conditions to be Exempt
- Without any action to join the competition
- Sanctioned by National Sport Organizations
- Not required to render future service

Question 18

FWT Rate
- Winnings (General and ≤ 10,000)

Answer 18

20% → General
Exempt → if ≤ 10,000 (PCSO Winnings)

If 10,000 → 20%
If 10,000 (PCSO) → Exempt
If 10,001 → 20%

Question 19

Interest (CDEF)

Answer 19

Currency Bank Deposit
Deposit Substitute
Expanded Foreign Currency Deposit

Question 20

FWT Rate
- Currency Bank Deposit and Deposit Substitute (General and Long-Term)

Answer 20

20% → General
Exempt → Long-term Deposit

Question 21

There are only 19 lenders. What tax will it be subject to?

Answer 21

Regular Income Tax
19-Lender Rule
- 19 or less lenders → Private (RIT)
- 20 + lenders → Public (FIT)

Question 22

For pre termination of LTD to push through, it must be issued by

Answer 22

Banks only

Question 23

For pre termination of LTD to push through, it must be in the name of

Answer 23

Individual
- X NRA NETB
- X Corporation

Question 24

Pre Termination Rate

Answer 24

5% → less than 5 years
12% → less than 4 years
20 % → less than 3 years

In solving, use the interest income starting from Y1 (not just the current year)

Question 25

FWT Rate - Expanded Foreign Currency Deposit

Answer 25

15% → Residents Exempt → Non Residents (alien & citizen)

Question 26

FWT Rate - Dividends (from **DC**) ## Footnote Remember : it must be from domestic corp

Answer 26

10% → RC, NRC, RA 20% → NRAETB Includes → share in net income of a taxable partnership or JV

Question 27

FWT Rate - Informer's Tax Reward ## Footnote What is the rate for NRANETB?

Answer 27

10% → 10% of amount recovered or limit of 1 Million ## Footnote NRANETB → also 10% (the only one not 25%)

Question 28

For NRANETB, the rate for all passive income is 25% of taxable income. True or False?

Answer 28

False - 25% of Gross Income

Question 29

Pacto de Retro and Conditional sales can be subject to CGT. True or False?

Answer 29

True

Question 30

2 Transactions Subject to CGT

Answer 30

Sale of Real Property - must be Capital Asset Sale of **Domestic** Stocks (Not Foreign) - must be Capital Asset - must be Directly to Buyer - Not PSE

Question 31

I sold my real property and it resulted to a loss. Is it subject to capital "gains" tax?

Answer 31

Yes - For RP, taxed whether gain or loss

Question 32

I sold my domestic stocks and it resulted to a loss. Is it subject to capital "gains" tax?

Answer 32

No - For stocks, taxed only if gain

Question 33

Rate and Base - CGT on Real Property

Answer 33

Rate → 6% Base → Higher of Selling Price or FMV

Question 34

Rate and Base - CGT on Domestic Stocks

Answer 34

Rate → 15% Base → Net Capital Gain

Question 35

As an individual, there are some exceptions to the 6% CGT - Requisites for sale of principal residence (30-18-10) ## Footnote NRA is an individual. Can NRA avail of this exception?

Answer 35

- sword declaration of intent (30 days) - full utilization of proceeds for new residence (18 months) - availed only once (every 10 years) ## Footnote No

Question 36

Formula - CGT, less than full utilization

Answer 36

(Unused Portion / GSP) x CGT

Question 37

Formula - Tax basis, less than full utilization

Answer 37

(Used Portion / GSP) x Tax Basis of Old PR

Question 38

Formula - CGT, more than full utilization

Answer 38

exempt

Question 39

Formula - Tax basis, more than full utilization

Answer 39

Tax Basis of Old PR + Additional Cost

Question 40

As an individual, there are some exceptions to the 6% CGT - sale to government

Answer 40

6% CGT or RIT

Question 41

DST on Real Property

Answer 41

1.5% (Higher of SP or FMV)

Question 42

I am a dealer, and I sold my stocks through the LSE What are the applicable - Business Tax - Income Tax

Answer 42

- VAT - RIT ## Footnote refer to table

Question 43

I am a dealer, and I sold my stocks directly to the buyer What are the applicable - Business Tax - Income Tax

Answer 43

- VAT - RIT ## Footnote refer to table

Question 44

I am NOT a dealer, and I sold my stocks through the LSE What are the applicable - Business Tax - Income Tax

Answer 44

- STT (0.6% of GSP) - X ## Footnote refer to table

Question 45

I am NOT a dealer, and I sold my stocks directly to the buyer What are the applicable - Business Tax - Income Tax

Answer 45

- X - CGT ## Footnote refer to table

Question 46

DST on Domestic Stocks

Answer 46

0.75% (Par Value)

Question 47

Aliens employed by POGO (regardless if RA or NRA) - subject to 25% FWT on Gross Income What is the minimum FWT per month?

Answer 47

12,500

Question 48

Who is a taxable estate? Judicial or Extrajudicial?

Answer 48

Judicial

Question 49

Who is a taxable trust? Revocable or Irrevocable?

Answer 49

Irrevocable

Question 50

For Taxable Estate / Trust, what will be the treatment of the distribution of share - for the estate / trust - for the beneficiary

Answer 50

Estate / Trust → Special Deduction Beneficiary → Income (subj. CWT)