Case Study # 3

Allison works as a Financial Controller of GAL Company and earns monthly gross salary of Php
She is entitled to the mandatory benefits of 13thmonth pay, SSS, Philhealthand Pag-ibig
She works in the same company for the whole calendar year of 2021. Aside from employment in
Her shop, which is non-VAT registered, has annual gross sales of Php 2,400,000, cost of sales of

1. What options are available to Allison as far as income tax is concerned?

Alison is qualifies to Income tax from business and compensatio
2. How much is her annual income tax due in each option?
Income tax from business and compensation = 394,100
OSD = 586,100
8% fixed rate = 432,100
3. Which option would result to the lowest income tax possible?
The option with the lowest income tax payable is option 1, from the computatio
Allison will benefit if she will use the calculation of compensation and busines
on option 1 for the results are less costly compared to the other option.
Income tax
Yearly gross salary 100,000.00
Monthly contribution 2,750.00
Gross salary 97,250.00

Business

Annual sales
Cost of sales'
total
Expenses
Total

Option 1- Compensation and Business

Annual Salary 1,167,000.00

For income
Income bracket rate difference
- 250,000.00 250,000.00
 250,000.00 400,000.00 20% 150,000.00
400,000.00 800,000.00 25% 400,000.00
800,000.00 1,167,000.00 30% 367,000.00

For business
Income bracket rate difference
- 250,000.00 250,000.00
250,000.00 400,000.00 20% 150,000.00
400,000.00 800,000.00 25% 400,000.00

Percentage tax 2,400,000.00 1%

Total tax due
rns monthly gross salary of Php 100,000.
Philhealthand Pag-ibig
021. Aside from employment income, she owns a shop selling baby’s accessories
Php 2,400,000, cost of sales of Php 1,000,000, and operating expenses of Php 600,000.

business and compensation, OSD and 8% fixed tax rate

tion = 394,100

is option 1, from the computation of the three different option. For income
on of compensation and business
ared to the other option.

1,167,000.00

For business

2,400,000.00
1,000,000.00
1,400,000.00 Total tax due
600,000.00
800,000.00

Option 2- OSD

Annual Salary

For income
Income bracket
excess additional Total -
250,000.00
 30,000.00 400,000.00
30,000.00 130,000.00 800,000.00
130,000.00 240,100.00

For business
Gross Sale
excess additional Total 40% Optional Standard Deduction
Total taxable income
30,000.00
30,000.00 130,000.00 Income bracket
-
250,000.00
24,000.00 400,000.00
394,100.00 800,000.00

Percentage tax
Total tax due
Option 3- 8% fixed rate

Annual Salary 1,167,000.00

Income bracket rate difference excess additional

- 250,000.00 250,000.00
250,000.00 400,000.00 20% 150,000.00
400,000.00 800,000.00 25% 400,000.00 30,000.00
800,000.00 1,167,000.00 30% 367,000.00 130,000.00

Gross sales 2,400,000.00

Tax rate 8%
Tax due 192,000.00

1,167,000.00

rate difference excess additional Total

250,000.00 250,000.00
400,000.00 20% 150,000.00 30,000.00
 800,000.00 25% 400,000.00 30,000.00 130,000.00
1,167,000.00 30% 367,000.00 130,000.00 240,100.00

2,400,000.00
ptional Standard Deduction 960,000.00
xable income 1,440,000.00

rate difference excess additional Total

250,000.00 250,000.00
400,000.00 20% 150,000.00 30,000.00
800,000.00 25% 400,000.00 30,000.00 130,000.00
1,440,000.00 30% 640,000.00 130,000.00 322,000.00

2,400,000.00 1% 24,000.00
586,100.00
Total

30,000.00
130,000.00
240,100.00

432,100.00