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Philippine Taxation > Lists, Requisites, Requirements > Flashcards

Lists, Requisites, Requirements Flashcards

1
Q

Which taxpayers are not allowed to use NOLCO? (4)

A
  • Those who are tax-exempt
  • Those under income tax holidays
  • Those taxed on gross income
  • Those whose sole income is subject to final income tax
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2
Q

Who are not allowed to use the OSD? (5)

A
  • NRAET
  • NRANET
  • Those mandated to use itemized deductions
  • Those subject to preferential rates
  • NIRC-exempt individuals with no other taxable income
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3
Q

Who are mandated to use itemized deductions?

A
  • Tax-exempt individuals and corporations
  • Those subject to special and preferential tax rates
  • Those subj to mixed tax regimes
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4
Q

What deductions are allowed to NRA?

A
  • Prorated CLUT
  • TPU
  • Vanishing deduction
  • Standard deduction of P500,000
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5
Q

Requisites to be exempt from CGT on sale of real property classified as capital asset, on the grounds of acquiring a new principal place of residence (8)

A
  • Seller must be a citizen/resident alien
  • The property sold is his principal residence
  • The proceeds are used to acquire a NEW principal residence
  • The BIR is duly notified of intention to avail exemption within 30 days of sale (thru fomr 1706 & Sword Declaration of Intent)
  • Reacquisition is made within 18 months from date of sale
  • The capital gain is held in escrow for the government
  • Exemption is availed of once in every 10 years
  • The historical cost or adjusted basis of the residence sold shall be carried over to the new residence
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6
Q

Which transactions are exempt from CGT on sale of real property?

A
  • Sale of raw lands to be used for socialized housing projects
  • Land transfers under the comprehensive agrarian reform law of 1998
  • Sale of principal residence to acquire a new principal residence
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7
Q

Exclusions from gross income

A

MRTGIRL:
MISCELLANEOUS: FGOCC income in PH, GPS income, P&A,CiLitArt,ReliCharEdSci, P&ASports, Contribs to SSS, PHIC, Pag-ibig, Union Dues, 13thMOPOB, Gains from sale of bonds, debentures, other cert of indebtedness > 5yrs maturity period; gains from redemption of shares from mutual fund company by an investor, MWE,BMBE income, Coop’s income*,NonstockNPEincome, Qualified employee trust funds income

RETIREMENT BENEFITS
TREATY-EXEMPT INCOME
GIFTS,BEQUESTS,DEVISES,DESCENT
INJURY/SICKNESS COMPENSATION
RETURN OF PREMIUM - INSURANCE (outliving policy)
LIFE INSURANCE POLICY PROCEEDS (insurable event)

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8
Q

Other exempt income

A 
BMBE income
Coop income
Nonstock nonprofit entity income
Qualified employee trust fund's income
Minimum wage
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9
Q

Qualifications to avail of the 8% income tax rate on gross sales and receipts plus Other Non-Operating Income *less 250k

A
  • Not a partner of a GPP
  • GSR do not exceed P3,000,000
  • Not subject to specific percentage tax
  • Not vat-registered
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10
Q

How do you compute OSD?

A

40% on Gross OPERATING INCOME for both individuals and corporations.
never include capital dealings or non operating income such as: gain from sale of securities, loss from sale of foreign stocks

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11
Q

What is included in 13th MOPOB?

A
  • Additional Compensation Allowance
  • Midyear bonus
  • Personal expenses paid by employer
  • 13thMOP - 1mo salary + P5,000 cash gift, for government employees. (pag private, any christmas gifts are considered de minimis benefit subject to the P5,000 ceiling)
  • Other benefits:
    • Christmas bonus of both private and government employees
    • Christmas gift of GOVERNMENT employees only
    • Other fringe benefits of r&f employees
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12
Q

Are fixed allowances taxable as regular compensation income, fringe benefit, or Other Benefit?

A

TAXABLE as regular compensation.
Allowances subject to liquidation or reimbursement are not part of compensation.
Allowances necessary to the employer’s trade are also not part of compensation.

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13
Q

Is RATA part of gross compensation income?

A

If government employee: RATA under PERA Act is TAX-EXEMPT.
If private employee: Generally TAXABLE. If excess is returned, then it will be considered employer’s expense and not part of compensation income.

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14
Q

Required attachments to the ITR for self-employed taxpayers

A

1) 2307 Cert. of Creditable Tax Withheld at Source
2) SAWT
3) Financial statements IF CLAIMING ITEMIZED DEDUCTIONS
4) If GSR+ONOI>P3M: Audited Financial Statements (schedule of income-producing properties, comparative p&l, and p&l & bal sheet cert. by CPA)

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15
Q

Required attachments to the corporate ITR

A

1) 2307 Cert. of Creditable Tax Withheld at Source
2) SAWT
3) Financial statements IF CLAIMING ITEMIZED DEDUCTIONS
4) Audited Financial Statements (schedule of income-producing properties, comparative p&l, and p&l & bal sheet cert. by CPA)

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16
Q

Required attachments to the ITR of pure compensation earners

A

2316 Certificate of tax withheld from compensation

17
Q

For RBE’s availing incentives by the IPA, the deadline for filing the Annual Tax Incentives report is

A

Within 30 days from the deadline of filing the final adjustment return

18
Q

Who are not required to file an ITR? (4)

A

1) COMPENSATION income <= P250,000 under the graduated rates (If self-employed or in business, they are required to file a return regardless of the amount of gross income)
2) An individual receiving purely compensation income, regardless of amount, from only one employer in the Philippines for the calendar year, the income tax of which has been withheld correctly by the employer. (substituted filing)
3) An individual whose sole income has not been subjected to final withholding tax pursuant to Sec 57 (A) of the Tax Code.
4) Minimum wage earner

19
Q

Imposition of the 25% surcharge (4)

A

1) Failure to pay the full / part of the amount of tax shown on any return
2) Failure to pay the deficiency tax within the time prescribed in the notice of assessment
3) Wrong venue filing
4) Late filing

20
Q

Grounds for compromise

A

1) Reasonable doubt - 40%

2) Financial incapacity to pay - 10%

21
Q

Suspension of the running of the statute of limitations (5)

A

1) For the period during which the Commissioner is prohibited from making the assessment, or beginning distraint/levy/proceeding in court and for 60 days thereafter
2) When the taxpayer requests for reinvestigation
3) When taxpayer cannot be located in given address
4) When no property could be located when a warrant of distraint/levy is served upon the taxpayer
5) When the taxpayer is out of the country

22
Q

Cases of reasonable doubt

A

1) Jeopardy assessment
2) Assessment lacks factual / legal basis
3) Taxpayer failed to file an administrative protest
4) The demand notice failed to comply with formalities
5) Best evidence can be disputed
6) Execution of the waiver of statute of limitations
7) A competent court made an adverse decision vs the BIR

23
Q

Cases which can’t be compromised

A

1) Withholding tax cases in general
2) Criminal tax fraud cases confirmed with CIR
3) Criminal violations already filed in court
4) Delinquent accounts with duly approved schedule of installment payment
5) Agreement form has been signed; cases where final reports of reinvestigation/reconsideration resulted to a reduction in the original assessment.
6) Cases which have become final and executory

24
Q

Grounds for abatement

A

1) Tax is unjustly / excessively assessed
- late because of substantial losses from prolonged labor dispute, force majeure, wrong venue

2) Costs involved do not justify collection

25
Q

Explain the remedies of the taxpayer and the process involved

A

1) Protest
LA > PAN (15) > FAN (30 - 180/60 - 30 - 15 -15-15-15-15)

2) Refund - 2 yrs
3) Criminal action vs abusive BIR officials
4) Apply for a TRC or injunction with CTA

26
Q

Fully deductible and partially deductible charitable and other contributions

A

Fully deductible: 1) Government, priority activities (CHEESY)

2) Accredited DOMESTIC Non government organizations (w cert from DSWD,DOST,PSC,NCCA,CHED); or (IBP,IRRI,DAP,UP+SC, CulturalCenterPH,ArtesianWellFund,RamonMagsaysay, TaskForce onHumanSettlements,NationalMuseum…)
3) Treaties, Special laws/corps, donations to FOREIGN inst….

Partially deductible: (10% of Taxable income if Individual, 5% if corp)

1) Govnt, nonpriority activities, but for PUBLIC PURPOSE
2) Non-accredited NGOs but DOMESTIC: (REYSCCR)

27
Q

If depletion cost after commercial production is incurred with dry holes, it is expensed in the period paid but…

A

not exceeding 25% of NI from MINING operations…

28
Q

Enumerate and discuss the 6 special expenses

A

1) Income dist. from taxable estate/trust
2) Transfer to reserve fund & payments to policies & annuity contracts of insurance companies
3) Dividend distribution of an REIT company
4) Transfer to reserve funds - taxable cooperatives
5) Discounts to senior citizens (RA9257)
6) Discounts to PWDs (RA9442)

29
Q

Enumerate and discuss the 8 deduction incentives

A

1) SC salary - 15% RA9257
2) PWD salary - 25% RA9442 RA7277
3) PWD improvements costs, facilities - 50%DC RA7277/RA9442
4) Addtl Training Expense - 50% RA8502
5) Adopt-A-School Program - 50%contrib RA8525
6) Breast-feeding practices RA7600 RA10028 - 200%costs
7) Free legal assistance: lower of 10%GI derivedIF* or actual amount collectibleIF
8) Additional productivity incentive bonus expense 50%+50%

30
Q

ITH Extension Criteria

A

1) Average Net Foreign Exchange Earnings for the FIRST THREE YEARS are at least $500,000 and
2) The capital equipment to labor ratio of the project does not exceed $10,000 to 1 for the year immediately preceding the ITH extension year being applied for.
3) Average cost of indigenous materials used in the manufacture of the registered product is at least 50% of the total cost of raw materials for the preceding years prior to the ITH extension year.

31
Q

Options when there is an overpayment in the Final Adjusted Return

A

1) Refund
2) Tax credit certificate
3) Tax credit carry-over

32
Q

Qualifications for ITH extension

A

1) If average cost of indigenous raw materials used in the manufacture of the registered product is at least 50% of the total cost of raw materials for the preceding years prior to the extension to the extension … OR
2) If the annual or average net foreign exchange savings or earnings (NFEE) is at least $500,000 during the first three years of operations …

33
Q

Exemptions from BPRT

A

activities registered with PEZA, SBMA, CDA, TIEZA

34
Q

When is inspection of books done more than once a year?

A
  • Verification of capital gains tax liabilities
  • Verification of compliance with withholding tax laws and regulations
  • If taxpayer requests for reinvestigation
  • Fraud / irregularities / mistakes
35
Q

The 5% discount for senior citizens applies to:

A 
Basic Necessities:
-Rice
-Corn
-Bread
-Fresh dried canned fish
-Fresh pork, beef, poultry meat, eggs
-Fresh and processed milk
-Ciffee, creamer, root crops
-Sugar, cooking oil, salt
-Detergent
-Firewood
-Charcoal, candles
PRIME COMMODITIES:
-Fresh fruits
-Flour
-Dried....pork,beef,poultrymeat
-Canned fish
-Noodles
-Onion, garlic
-Vet products
-Nipa shingle
-Geriatric diapers

Philippine Taxation (17 decks)

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