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2nd year - 1st sem > taxation 4 > Flashcards

taxation 4 Flashcards

1
Q

Why is income subject to tax?

A

Income is regarded as the best measure of taxpayer’s ability to pay tax. It
is an excellent object of taxation in the allocation of government costs.

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2
Q

What is income for taxation purpose?

A

It is simply referred to as “gross income” under the NIRC. A taxable item of income is referred to as an “item of gross income” or “inclusion in gross income”

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3
Q

It is simply referred to as “gross income” under the NIRC. A taxable item of income is referred to as an __________ or ________

A

“item of gross income” or “inclusion in gross income”

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4
Q

Under ______, Taxable Income refers to certain items of gross income less
deductions and personal exemptions allowable by law.

A
  1. NIRC
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5
Q

________ is broadly defined as any inflow of wealth to taxpayer from whatever source, legal, or illegal, that increases net worth.

A

Gross income

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6
Q

________: A tax on income whether gross or net.

A

Income Tax

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7
Q

Nature of Income Tax

A

Direct {DiE AGen }
Excise
Ad-valorem -based on value or amount of income
General
National

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8
Q

Purpose of Income Tax

A
  • Provide a large amount of revenue
  • Remove inequalities in the distribution of income and wealth which are deterrents to social progress
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9
Q

Feature of Income Tax

A
  1. Comprehensive:
  2. Progressive:
  3. Pay as you File:
  4. Withholding Tax System:
  5. Substituted Filing:
  6. Schedular System:
  7. Global System:
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10
Q

Bases to income - either thru residence, place of income or nationality

A

Comprehensive:

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11
Q

Direct and graduated tax

A

Progressive:

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12
Q

Upon filing pay the tax due

A

Pay as you File:

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13
Q

Income Payor and Income Payee

A

Withholding Tax System:

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14
Q

Income Payor files for the income payee (purely compensation earner)

A

Substituted Filing:

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15
Q

Tax treatment depending on category (use for individual classification)

A

Schedular System:

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16
Q

Tax treatment depending on category (use for corporation classification)

A

Global System:

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17
Q

Elements of gross income:

A
  1. Return on capital
  2. Realized benefit
    3.Not exempted by law, contract or treaty
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18
Q

Capital items deemed with infinite value:

A
  1. Life
  2. Health
  3. Human reputation
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19
Q

Taxable recovery of lost profits

A
  1. Proceeds of crop insurance or livestock
  2. Guarantee payments
  3. Indemnity from patent infringement suit
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20
Q

Realized benefit concept:
The ff: are not benefits, hence, not taxable:

A
  1. Receipt of a loan
  2. Discovery of lost property
  3. Receipt of money or property to be held in trust for or to be remitted to another person.
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21
Q

Realized concept
Requisites of a realized benefit:

A
  1. exchange or transaction
  2. Transaction with another entity
  3. Increase in net worth
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22
Q

Types of transfer

A
  1. Bilateral or exchange
  2. Unilateral
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23
Q
  1. Bilateral or exchange
A

a. Sale
b. Barter

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24
Q
  1. Unilateral
A

a. Succession
b. Donation

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25
Income exempted by Law:
1. Income of qualified employee trust fund. 2. Revenues of non-stock educational institution. 3. SSS, GSIS, Pag-ibig or Phil. Health benefits 4. Regular income of Barangay Micro-business Enterprises 5. Salaries of and minimum wage earners and qualifying senior citizen. 6. Income of foreign governments and foreign government-owned and controlled corporation. 7. Income of international organization with tax immunity.
26
TYPES OF INCOME TAXPAYERS
A. INDIVIDUAL B.CORPORATIONS
27
TYPES OF INCOME TAXPAYERS: INDIVIDUAL
1. Citizen 2. Alien
28
Types of Citizen
a. Resident Citizen b. Non-resident Citizen
29
Types of Alien
a. Resident alien b. Non-Resident Alien b.1 engage in trade or business b.2 not engage in trade or business
30
TYPES OF CORPORATIONS
1.DOMESTIC 2. FOREIGN CORPORATION A. RESIDENT FOREIGN CORPORATION B. NON-RESIDENT
31
General Classification for Individuals A. ________ The intention shall determine his appropriate residency classification. The General Classification for Individuals. B. _______ 1. ______- At least _______ stay abroad is nonresident citizen 2. ______- more than ______ of stay in PH at year end is resident 3. Alien- not more than 1 year but more than ______days are deemed NRAel 4. Alien- not more than 180 days are considered NRAneb.
1. Intention 2. Length of Stay 3. Citizen 4. 183 days 5. Alien 6. 1 year 7. 180
32
________ are a critical component of the Philippine economy, providing the government with necessary revenue to fund public services and infrastructure.
Taxes
33
________ is the total earnings before taxes or other deductions for individuals, or the revenue from all sources minus the cost of goods sold for businesses.
Gross income
34
SOURCES OF GROSS INCOME
a. Compensation income b. Business and professional income c. Passive income
35
Earnings from an employer-employee relationship, including salaries (plus any overtime pay, holiday pay, or night differential pay), fees, commissions, honoraria, taxable bonuses and allowances, and other benefits
Compensation income –
36
Earnings from running a business or practicing a profession, including profits from the sale of assets, commissions, service fees, professional fees, rental income, and other incomes not covered by compensation income
Business and professional income –
37
Earnings from sources in which the taxpayer is not actively involved
Passive income –
38
Example of passive income
*Profits from the sale of real properties or shares of stock *Interest earned on bank deposits *Interest and dividends earned on investments *Annuities (e.g., income streams for retirees) *Pensions *Rents *Royalties *Prizes and winnings *A partner’s share from the net income of a general professional partnership
39
Income exempted by Law
1. SSS, GSIS, Pag-ibig or PhilHealth and other government mandated benefits 2. 13 month pay, bonuses, commission less than 90k 3. De minimis benefits: paid vacation, leave, medical , and etc 4. Union dues 5. Retirement benefits: pensions, gratuities
40
kINDS OF INCOME TAXATION SCHEMES
1. Capital Gains: 2. Final Income 3. Regular Income:
41
the tax paid on an individual's total taxable income, including salaries, wages, commissions, and business profits. The tax rate varies based on income level.
Regular Income:
42
Regular income tax rates range from________, with higher rates for higher income brackets. Deductions and credits may lower the total tax owed.
0% to 35%
43
Who Pays Regular Income Tax?
1. All Filipino citizens and resident aliens earning income in the Philippines 2. Non-resident aliens may also be subject to regular income tax on their Philippine-sourced income.
44
WHAT IS THE TAX RATE OF RIT: 250K AND below
NONE
45
WHAT IS THE TAX RATE OF RIT: Above 250K to 400K
15% of excess over 250k
46
WHAT IS THE TAX RATE OF RIT: Above 400K to 800K
22,500 + 20% of excess over 400k
47
WHAT IS THE TAX RATE OF RIT: Above 800K to 2M
102,500 + 25% of excess over 800k
48
WHAT IS THE TAX RATE OF RIT: Above 2M to 8M
402,500 + 30% of excess over 2M
49
WHAT IS THE TAX RATE OF RIT: Above 8M
2.2025M + 35% of excess over 8M
50
a flat tax withheld on certain types of income, such as interest, dividends, and royalties. This tax is considered a final settlement of tax obligations on those income sources.
Final Income:
51
Who Pays Final Income Tax?
Individuals and businesses that earn income from interest, dividends, or royalties are subject to final income tax.
52
FIT Tax Rates
Final income tax rates range from 10% to 20%, depending on the type of income.
53
Interest Income: Local currency deposit Short term
25% NRA-NETB 30%NRFC 20% THE REST
54
Interest Income: Local currency deposit Long term
20% DC UG RFC 25% NRA-NETB, 30% NRFC the rest kay exempt
55
PRe termination on long term deposits: less than 3 yrs
25% NRA-NETB 30% NRFC 20% the rest
56
PRe termination on long term deposits: 3 to less than 4 yrs
25% NRA-NETB 20% dc ug rfc 30% NRFC 12% the rest
57
PRe termination on long term deposits: 4 to less than 5 yrs
25% NRA-NETB 20% dc ug rfc 30% NRFC 5% the rest
58
PRe termination on long term deposits: 5 yrs or more
0% all
59
foreign currency deposit: interest income from FCDUs/OBU depository banks
15% RC,RA,DC & RFC Exempt the rest
60
foreign currency deposit: interest income of EFCDU/OBU banks
10% RC,RA,DC & RFC Exempt the rest
61
foreign currency deposit: INTEREST INCOME ON FOREIGN LOANS
20%NRFC RIT the rest
62
Dividend income from domestic corp in general: Earnings from before 1998
Exempt all
63
Dividend income from domestic corp in general: Jan 1, 1998 earnings
25% NRA-NETB 20% NRA-ETB Exempt DC & RFC 15% or 30% NRFC 6% the rest
64
Dividend income from domestic corp in general: Jan 1, 1999 earnings
25% NRA-NETB 20% NRA-ETB Exempt DC & RFC 15% or 30% NRFC 8% the rest
65
Dividend income from domestic corp in general: Jan 1, 2000 earnings
25% NRA-NETB 20% NRA-ETB Exempt DC & RFC 15% or 30% NRFC 10% the rest
66
Dividend income from foreign corp in general:
RIT ALL
67
Dividend or share in net income from REIT
<10% NRA-NETB, NRA-ETB & NRFC Exempt NRC, DC & NRC 10% RC
68
Share in net income of taxable partnership, joint venture % co ownership
25% NRA-NETB 20% NRA-ETB 30% NRFC 10% the rest
69
Passive royalties: In general
25% NRA-NETB 30% NRFC 20% the rest
70
Passive royalties: frOM cinematographic films and similar works
25% NRA-ETB & NRA-NETB 0% NRFC 20% the rest
71
Passive royalties: frOM books, literary works, and musical compositions
25% NRA-NETB 20% DC & RFC 30% NRFC 10% the rest
72
Active royalties:
25% NRA-NETB 30% NRFC RIT the rest
73
Taxable prizes, amounting to: less than 10k
25% NRA-NETB 30% NRFC RIT the rest
74
Taxable prizes, amounting to: more than 10k
25% NRA-NETB 30% NRFC 20% the rest
75
Winnings: In general
25% NRA-NETB 30% NRFC RIT DC & RFC 20% the rest
76
Winnings: PCSO & Lotto winnings less than 10k per ticket
25% NRA-NETB 30% NRFC Exempt the rest
77
Winnings: PCSO & Lotto winnings more than 10k per ticket
25% NRA-NETB 30% NRFC 20% the rest
78
Informer's tax reward
25% NRA-NETB 30% NRFC 20% the rest
79
Tax free covenant bonds
25% DC, RFC & NRFC 30% the rest
80
CGT DOMESTIC TAX
15% applied to all individual
81
CGT rEAL PROPERTY CAPITAL ASSET
6% applied to all individual
82
Real estate capital asset
CGT - 6%
83
Real estate ordinary asset
RIT
84
Foreign stocks
RIT
85
dOMESTIC STOCKS
15%
86
a tax levied on the profit made from the sale of capital assets, such as real estate, stocks, and other investments.
Capital Gains:
87
Who Pays Capital Gains Tax?
Individuals and businesses that sell capital assets are required to pay capital gains tax on their profits.

2nd year - 1st sem (10 decks)

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