PRIZES.

o Not more than P10,000 = basic tax

o More than P10,000 = 20%FWT; 25% FWT for NRANETB

OTHER WINNINGS

TAXPAYER

RC, RA,
NRAET NRANETB
NRC
20% 25%
OTHER Winnings (regardless of amount)*
20%
PCSO/Lotto Winnings t

o Prior to 2018 Exempt Exempt 25%

0 TRAIN Law (beginning Jan. 1, 2018)

o Not more than P10k Exempt Exempt 25%

o More than P10k 20% Exempt** 25%

*NOT INCLUDED are winnings exempt from income tax, such as but not limited to:

■ Winnings under Sec. 126 of the Tax Code [subject to OPT (only) of 4%; 10%, as the case may be]

■ Prizes and awards made primarily in recognition of religious, charitable, scientific, educational, artistic, literary,
or civic achievement but only if:

0 The recipient was selected without any action on his part to enter the contest or proceeding;

0 The recipient is not required to render substantial future services as a condition to receiving the

prize or award.

■ All prizes and awards granted to athletes in local and international sports competitions and tournaments
whether held in the Philippines or abroad and sanctioned by their national sports associations.

“One of the obvious errors/inconsistencies under the TRAIN Law

24. Determine the total final tax assuming he is:

RC NRC RA NRA-ET
a. P553.000 P490.000 P150,000 P687.500
b. 121,500 90,000 121,500 150,000
c. 131,000 90,000 90,000 90,000
d. P553.000 P490.000 P550,000 P687,500

❖ Answer: A
 Solutio
25. n:

RC&RA NRC NRA-ET NRA-NET

Interest, peso deposit, MBTC @ 20% P20,000 P20,000 'P20,000 P25,000
Interest, US$ deposit, BDO @ 15% 63,000 exempt exempt exempt
Prize (TV) won in a local lottery @ 20%; 25% 10,000 10,000 10,000 12,500
PCSO/Lotto winnings @ 20%; exempt; 25% 400,000 400,000 *** 500,000
Dividend, domestic company @ 10% 60,000 60,000 -
Dividend, domestic company @ 20% - - 120,000 -
Dividend, domestic company @ 25% - - -■ 150,000
Total FWT P553,000 P490,000 P150,000 P687.500

0 ***The exemption of PCSO/Lotto winnings for NRA-ETB was not repealed under TRAIN Law.

0 Business income in the Philippines shall be ignored (even if the problem is silent) if the taxpayer is

NRA-NETB because the taxpayer is not engaged in business in the Philippines.

Assuming the taxable year, is 2017, determine the taxable net income assuming he is: RC NRC
RA NRA-ETB

P80.000 P180.000 P830.000 P180.000

180,000 80,000 1,000,000 1,000,000

1,550,000 900,000 900,000 900,000

1,650,000 1,000,000 1,000,000 1,000,000

a.

b.

c.

d.

Solution:

Answer: C

NRC RA NRA-ETB
P180.000 P830.000 P180.000
80,000 1,000,000 1,000,000

26
.

❖ Answer: B
 Solutio
900;000 n: 900,000 900,000
1,000,000 1,000,000 1,000,000

RC NRC, RA, NRA-ET

P1,000,000 P1,000,000
200,000 -
20% FWT 20% FWT
7.5% FWT 7.5% FWT for RA;

Exempt for NRC&NRAET

Business income, Philippines Business income, Hongkong Interest, peso deposit, MBTC Interest, US$
deposit, BDO

Interest, deposit in Hongkong Prize (TV) won in a local lottery PCSO/Lotto winnings

Prize won in contest in U.S. Lotto winning in U.S. Dividend, domestic company

50,000

20% FWT Exempt 300,000

100,000 10% FWT

20% FWT

Exempt

Basic exemption

Additional exemption

Taxable net income

(50,000)

(50,000)

P1,550,000

10% FWT for RA&NRC 20%forNRAET

(50,000) (50,000) POOO.OOO

Assuming the taxable year is 2017, determine the total final tax assuming he is:

26
.

❖ Answer: B
 Solutio
RC NRCn: NRAET NRA-ET

a.

b.

c.

d.

P553.000

121,500

131,000

142,000

P490.000

90,000

90,000 90,000

P550.000

150,000

90,000 150,000

P150,500

687,500

90,000
150,000'

26
.

❖ Answer: B
 Solutio
n:

26
.

❖ Answer: B
 Solutio
n: RC&RA NRC NRA-ET
P20.000 P20,000 P20,000 ~P25^000
31,500 exempt exempt exempt
10,000 10,000 10,000 12,500
exempt exempt exempt 500,000
60,000 60,000 -
- 120,000
- - - 150,000
P121.500 P90,000 P150,000 P687.500

P700,000
300,000
40,000

70,000

500,000

Interest, peso deposit, MBTC @ 20%; 25% Interest, USS deposit, BDO @ 7 ^%; exempt Prize (TV) won in a
local lottery @ 20%; 25% pCSO/Lotto winnings; exempt; 25%

Dividend, domestic Income Tax Due - TRAIN Law company @10% .

Dividend, domestic company @ 20%
(in excess ofP250,000 @ 20%) P30,000
Dividend, domestic Less:CWTax (12,000) company @ 25%
Total FWT Income Tax Payable pi8t QOQ
Use the following data for the next three (3) questions:

Ana, a resident citizen, provided the following data for year current taxable year:

Gross income from business (gross of R12,000 CWT)

Business Expenses

Royalty from books

Gain on direct sale to buyer of shares of stock of a domestic corporation held as

P30.000
capital asset
4,000
Loss on sale of land in the Philippines held as capital asset with cost of 10,500
R1,500,000 when the zonal value is P1,200,000 72,000

27. How much is the income tax payable of Ana?

a. P12,000 c. P30,000
 Solutio
b. P18,000
n: d. nil

❖ Answer: B

Gross income from business P7G0,000

Business Expenses (300,000)

Taxable Net Income P400,000

o If the question is income tax payable, compute only the income tax still due on income(s) subject to
basic income tax.

28. How much is the total income tax expense of Ana?

a. P116.500 c. P159.500

b. P207.500 d. P156.000

*♦* Answer: A

Basic Income Tax (refer to computation above) Final Tax on Passive Income (40.Q00 x 10%)

* CGT on shares of stock (P70,000 x 15%)

CGT on real properties (P1,2M x 6%)

?P = £°St" Loss = P1 -5M - -5M = P1M ZV = P1,200,000

TOTAL Income Tax Exoense

° XTTAXEXPENSE=s P116,500
income tax (not the payable) + FWT on passive income
29. Assuming the taxable year is 2017, how much is the total income tax expense of Ana?

a. P116,500 c.P159,500

b. P207.500 d. P156,000

❖ Answer: C

Solution:

■ Basic Income Tax P80,000**

■ Final Tax on Passive Income (40,000 x 10%) 4,000

■ CGT on shares of stock (P70.000 x 5%) 3,500

■ CGT on real properties (P1.2M x 6%) 72,000

P159.500
SP = Cost
Gross - Loss
income = P1,5M
from - ,5M = P1M vs. ZV
business =
P700.000
Business Expenses (300,000)
Basic personal exemption (50,000)
Taxable Net Income P350.000
Tax Due; old graduated rate [P50.0000 P80,000**
+ (P100,000 x 30%)]

o INCOME TAX EXPENSE = basic income tax + FWT on passive income + CGTs o Sale of Real Property
classified as capital asset situated in the Philippines is subject to 6% CGT (regardless of whether the
transaction resulted to a gain or loss).

o CAPITAL GAINS TAX on sale of shares of unlisted DC by individual taxpayers and domestic corporation:

0 Prior to 2018

» 5% on first P100,000 capital gain

■ 10% in excess of P100,000 capital gain

<0 Beginning 2018 under TRAIN Law = 15% of capital gain