Rates, numbers, tables

Question 1

Installment reporting of CGT is allowed if…

Answer 1

If the selling price is more than P1,000 and the initial payments do not exceed 25% of the selling price.

Question 2

Computation of the contract price

Answer 2

Selling price
(Mortgaged assumed)
Constructive Receipt
---------------------------------
CONTRACT PRICE

Question 3

Computation of Net Gain/Loss from sale of domestic stocks

Answer 3

Selling Price
(Tax basis/cost)
(Selling expenses)
(Doc Stamp Tax)
\_\_\_\_\_\_\_\_\_\_\_\_\_
NET CAPITAL GAIN/LOSS

Question 4

DST on sale of stocks

Answer 4

P 0.75 per P200 of PV of stocks

Question 5

DST on sale of real property classified as capital assets

Answer 5

P15 per P1,000 of tax basis.

*If the buyer is government, then 15 per 1,000 of consideration PAID.

Question 6

Penalty for late / non-filing

Answer 6

P1,000

Question 7

How do you compute OSD?

Answer 7

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

Question 8

Recite the De Minimis rates! 11 items

Answer 8

PER EMPLOYEE

1) Monetized unused vacation leave credits not exceeding 10 days - for private employees
2) Vacation and sick leave credits paid to government employees (regardless of number of days)
3) Medical cash allowance to dependents - P1,500 per sem
4) Rice subsidy - P2,000 per month
5) Actual medical assistance - P10,000 per year
6) Uniform allowance - P6,000 per year
7) Laundry allowance - P300 per month
8) Cash gift during christmas / anniversary - P5,000 per year (private)
9) Employee achievement award, tangible, P10,000 value / year
10) Benefits by virtue of CBA and productivity schemes up to P10,000.
11) Daily meal allowance = 25%basic minimium wage on a per region basis

Question 9

Exempt Fringe Benefits

Answer 9

1) 70% of the cost of a first-class plane ticket
2) Economy / business class plane ticket
3) DAILY lodging up to $300/DAY
4) Local transportation, food and beverage
5) Reasonable expenses for business meetings…
6) Educational assistance directly involved with employer’s trade***
7) Educational assistance for dependents if provided through a competitive scholarship by the company
8) Exempt housing privilege (AFP,within50mperimeter,temporary<3mos)
9) Insurance under GSIS, SSS, other law-enforced contributions

Question 10

Inherent limitations of taxation (5)

Answer 10

A. Non Delegation of the power to Tax – the power to tax is purely legislative and it cannot be delegated by the legislature to the executive or judicial department of the government. Separation of the three branches of government.

B. Exemption from taxation of government entities. Government agencies performing essential government functions are exempt from tax unless expressly taxed while those performing proprietary functions are subject to tax unless expressly exempted. Government cannot tax itself.

C. Public Purpose – purpose affecting the inhabitants of the state as a community and not merely as individuals. Financing educational activities, promotion of science, maintenance of roads and bridges, aid for victims of calamities, etc. etc.

D. Territorial Jurisdiction – the tax laws of the state are enforceable only within it’s territorial limits. Tax laws do not operate beyond the country’s territorial limits.

E. International comity – the property of a foreign State or government may not be taxed by another. Courteous and friendly agreement and interaction between nations.

Question 11

IPO tax rates

Answer 11

4% 2% 1%

<25% >25%< 33 1/3% < 33 1/3%

Question 12

Who are not required to file their ITR?

Answer 12

1) Those with income P250,000 and below
2) Purely compensation earners where they only have one employer within the taxable year and their spouse is qualified for substituted filing.
3) Those whose sole income is subject to final withholding tax

Question 13

MCIT can be carried over for ___ years, and is imposed on the ___th year of operations.

Answer 13

carried over for 3 years and is imposed on the 4th year of operations

Question 14

The books of account and other records shall be examined ______ in a taxable year by the BIR officers, done in the taxpayer’s office or place of business of office of the BIR.

Answer 14

only once

Question 15

When is inspection of books of accounts done more than once?

Answer 15

1) Fraud, irregularity, errors
2) Taxpayer requested for reinvestigation
3) Verification of compliance with withholding tax laws
4) Verification of capital gains tax liabilities

Question 16

Deductibility of Research and development cost

Answer 16

Must be amortized over a period of AT LEAST 60 months

Question 17

What is the arbitrage limit on interest expense?

Answer 17

33% of interest income earned, and for the interest expense to be deductible, it must come from indebtedness.

Question 18

What are the rules on deduction of EAR expense?

Answer 18

1% of net revenues, or 1/2 of 1% of net sales.

If both, prorate. Actual x Sales/Total Income; vs Actual

Question 19

Formula for Basic Real Property Tax

Answer 19

1% of Assessed Value

Question 20

Formula or Additional Special Real Property Tax - SEF

Answer 20

1% of Assessed Value