national taxation

Question 1

What are the income taxes

Answer 1

1. WT on brokers (income on commission)

720, 000 15%

Question 2

what is considered the gross income?

Answer 2

compensation income
business income
passive income
capital gain

Question 3

what are the allowable deductions from gross income

Answer 3

personal
itemized
optional
premium on health/hospitalization insurance

Question 4

what are itemized deductions

Answer 4

connected in trade/business; incurred/paid during taxable year; reasonable, ordinary and necessary

Question 5

what are personal deductions

Answer 5

basic personal - P50,000 each taxpayer;
P20, 000 estates or trusts;
Additional - P25,000 each qualified dependent (Max of 4)

Question 6

what are the premium deductions

Answer 6

actual, not exceeding P2,400 per year provided family income ______

Question 7

what are optional deductions?

Answer 7

40%

Question 8

what are the national taxes?

Answer 8

DDOVIE
doc stamp
donors tax
other % tax
VAT
income tax
estate tax

Question 9

what are not included in the gross income?

Answer 9

lotto winnings
compensation for injuries
value of property acquired by inheritance
xmas bonus, productivity incentives

Question 10

what are the income taxes on real estate

Answer 10

CGT - capital assets - 6%; 30 days execution DoS
CWT 
a. ordinary assets - 
1.5% 500K and below
3% 500,000 - 2M
5% 2M above
6% -not habitually engaged (banks)

Question 11

what are considered as ordinary assets

Answer 11

• stock in trade, inventory
• used in trade/business (office)
• acquired by banks through foreclosure sales
• for future use as RE but later changed
• taxpayers changing from RE to non-RE
• originally registered as RE but didn’t operate
• abandoned, idle, depreciated still ordinary

Question 12

how to know if taxpayers are habitually engaged?

Answer 12

• registered with HLURB/HUDCC

- if not registered, at least 6 real estate transactions

Question 13

what real properties can change in classification?

Answer 13

• succession/donation and doesn’t use as ordinary

- received as dividend not engaged in real estate and doesnt use

Question 14

what will happen to CGT if paid on full, if paid on installment, if paid on deferred cash basis

Answer 14

cash sale - selling price paid in full

deferred cash basis - initial payments in year of sale 25%
-entire selling price taxable

installment –?

**No CAR issued to buyer unless CWT is fully paid

Question 15

whats the exemption on CGT for principal residence all about?

Answer 15

proceeds from sale - FULLY used for construction/acquisition of new principal home

• 18 months from date of notarization of sale
• exemption = 1 every 10 years

Question 16

for exemption in CGT, how many days must you give notice?

Answer 16

30 days from date of sale - BIR

sworn declartion to RDO

Question 17

what are requirements for the exemption due to new principal residence

Answer 17

• cert from arch. / engr. showing cost
• building permit
• if purchase, Deed of Absolute sale

Question 18

what are the taxes on ordinary and capital assets?

Answer 18

• Capital: CGT, Doc stamps

- Ordinary:CWT, Doc stamps, VAT

Question 19

what are the rates of the doc stamp tax?

Answer 19

sale: 15 for every 1000
mortgage: 20 for every 5000, 10 for every fraction of 5000
lease: 3 for every 2000, 1 for every 1000

Question 20

what are the rates of the doc stamp tax?

Answer 20

sale: 15 for every 1000
mortgage: 20 for every 5000, 10 for every fraction of 5000
lease: 3 for every 2000, 1 for every 1000

Question 21

what is percentage tax?

Answer 21

3% (instead of a 12% VAT); payable if VAT-exempt transactions:

1. Revenues - P 1, 919, 500
2. House and lot - 3, 199, 200
3. lease of P 12, 800 or if total is less than P1, 919, 500

Question 22

what else are other vat exempt transactions (that won’t pay percentage tax and VAT)

Answer 22

• socialized housing

- Capital assets (pay CGT)

Question 23

what is the VAT payable if 2/more adjacent lots?

Answer 23

-2 or more adjacent units/lots within 1 year by 1 buyer and seller, exempt from VAT if _______

Question 24

donors tax

Answer 24

2-15% if relative up to 4th degree

30% if stranger

Question 25

what is the vat formula

Answer 25

SP = 100; VAT = 12

gross selling price with vat = 112

if gross price given; VAT = gross * 12/112
net price = gross price * 100/112

if net price is given: VAT = net * 12%
gross = net * 1.12

Question 26

estate tax

Answer 26

only upon DEATH

gross estate - deductions = net estate

Question 27

what are the allowed deductions

Answer 27

funeral expenses up to 5% or max of 200K
judicial expenses
claims against estate, losses, mortgages
medical expenses - actual, within 1 year prior death,

Question 28

what are the penalties for non payment of tax?

Answer 28

25% surcharge
50% if fraud/falsify surcharge
20% interest p.a. on unpaid portion