‘xn: a ep .LS AND CASES: a AREVIEWER ‘WITH CODA i + exchan wdinary income IS any gain from sale or © ge of pr : + ordina Sree ota antl 285: one ie «ordinary loss the 0900s ae ordi a nt tor ordinary 988 O 10855 (COMPETE, —_* = + Note ther = = Capital gains) engaged in resi | Inreaterate bans | Cetable witha 1 property tobe considered €2pita OF ody, se buses ess | arena oti teeter fr ret ei ; : {Sea nin yeor 0 Depends. ; te corporation you're COURSE! for sels example, Go of #100, pital gains tax since aes ee 111s P500,000 ss mes to P2M hing It tis above P2M — 5% eon comenae, | Sapam nee ore eas ate IF it were ordinary, i'l be included in the corporations ‘gross income, which will be taxed 30% after all te Corporation NoT | Corporation engaged | if property cons deductions have been accounted for. The questior fengoged in real | invealestae busmess | ordinary seset = 60 do you have enough deducti 1d proof) which wil oats bushes creditable withholding enable you to get a better |, More money afte eee all the texes are paid out)? It property considered capital asset — 6% final Real estate transactions ieee . i ‘Corporation Tnaviual NOT IR Ruling 27-02 gives some steps to determine the tax in: fengoped inveal | engaged in trade or state transactions estate business | business ‘+ First, determine the character of property being sold. © If property isnot used in business of seller, then itis a capil asset and the gain ofthe seller is subject to 6% capital gars tax based on gross selling price or fair market value. © If the property is used in the busi 's Used i iness of the seller, treated as ordinary asset, so the withholding tax rates bel* Corporation Inciviual engaged in shall aply. These rates wil depend one ‘engaged in real | trade or business 1 by the buyer ar ce cue ‘on EVERY instalment ° fe seller is exempt or taxable 1 twas on cash or ae i deterred payment, Whether the seller is engaged in real estate business buyer withhotes the tax fon the frst instalment ithe seller is engaged in real estate business, what ¥ ‘the gross selling price?«: ce vss aH . sanevitnee Tt COOALS AND CASES tal payment in the year of saje price INCOME Tax. a) eres and equipment to subject to normal corporate income tax oF capital )_ Distinguish an ordinary asset from 2 capital Exam) Suggested answer: 12) The sale of the machineries and equipment is subject to normal Section 40 Is chopped up in three parts. Keer better understanding of the provisiaoe LESS TAXING aneviee aT CODALS AND CASES is us the general rule and the exception, INCOME Tax_ [basis for Determining Gain or Loss wom Secor Sc] 219 Loss from Sale or Disposition of us the substituted ba: the basis for Property (R.R. 8-2001) to on the transferor later sells the stock ne Mode of acquisition Tae “free exc Je. me {got inthe tax-free exchang [Acquired by purchase “The actual cost ‘See. 40. Determination of Amount and Recognition of Gain or 2._ By Inheritance Fair market value toss. — 3. By ait ‘The seme as if it would be = in the (A) Computation of Gain or Loss. — Te gain from the sal hands ‘of the donor or the’ last Reetboation of property. shall be the excess of the ay fons seated thereram over the bass or adjusted basis for determ gain, andthe oss for determining from the sale or othe money receved plus the firma Acquired for less than an money) received; ‘+ Gain is the excess amount realized over the basis for determining gain + Loss is the opposite + The amount realized is the sum of money received plus the fer ‘market value of the property (other than money) received © What is the basis of determining gain or loss? ‘adequate consideration in ‘money or its worth ‘Amount paid by the transferee for ‘the property If acquisition cost is increased ‘Adjusted basis of 1 to 4 ‘Acquired under a previous tax- free exchange Substituted basis (B) Basis for Determining Gain or (of Property, — The basis of property arket price or value as of the date of acquisition, i the ‘was acquired by innentance; or fair meriet vues of = 7 Seerminina I roperty was acquired in money less than an adequate Broperty was acquired wsaction recognized ung anized under paragraph (C)(2) ofthis Section Example: Jung-hwan the Torpe sold a car worth P1\ in exchange for P110 worth of Friend Zon Get the amount realized first: Deduct the basis: Gain: ‘gain for 140 (cash + stock + property) jue of car) jin for Jung-hwan), loss: How do you make the transaction a tax-free exchange? Check the codal below.220 Tax-free Exchanges “TAX MADE LESS TAXING: [A REVIEWER WITH CODALS AND CASES (€) Exchange of Property. — (2) General Rule, — Except 2 fexchange or property, the entire af tase may be, shall be recognized. ‘gain or loss shall be recognized ifn pursuance mcaliation — herein provided, upon the sale or mount of the gail oF 10ss, a8 the (@) A corporation, which Is 8 party to & merger or conseiation, exchanges property solely for stock na corporation, ‘party to the merger or consolidation; oF shareholder exchanges stock in 8 corporation, which isa Ghpe'ne mene or eansaisation, soll forthe stock ot ‘another corporation also a party to the merger or consolidation; corporat party tothe merger or consolidation "No gain or loss shall also be recognized if property is transferred to 8 corporation by a person in exchange for stock or unit of participation in ‘Such @ corporation of which asa result of such exchange said person, ‘alone oF together with others, not exceeding four (4) persons, gains Control of said corporation: Provided, That shall not be considered as issued in return General rule: ina sale or exchange of property, the entire amount Of gain or loss is recognized (© EXCEPT (no gain or loss is realized): + In 2 merger/consolidation (m/c), where a corporation ‘exchanges property solely for stock in another corporation, which is also a party to the m/c Tn Vc, where a shareholder exchanges stock It? ‘poration for the stock of another ration, also 2 Party to the m/c ae In a m/c, where a security “7 ’ security holder of a corpora Sxchanges his securities in such corporation solely Stock or secures in anather corporation aso 2 pat ® Where property Is transfe srred we fer to a corporation person In ©xchange for stock in the corporation, 2nd te other pesuch exchange is that the person (and uP * Persons) gains control of the corporation, but . Noone hd 24 stocks issued for servi i return fr progernt Mt Ae Nt considered asisued in Definitions (2) The term “securities” mean “Snotes” of whatever class or du nen used inthis Section, ity perties of another corporat - rater corporation sey fo S tansactin tobe regarded ara merger consohancg attr purview ofthis Section ft must beuncrtaten for bons de eons Purpose and not sci for the purpose of ecping te Hosen a the property of the transferor, the term ‘property’ shal be taken to Include the cash assets ofthe transferor (©) The term *controi",) when used Section, shall mean ing at least ARy-one s8es of stocks ented (@) The Secretary of Finance, upon recommendation of the jes and regulations for Proper Implementation of this Section, * Securities mean bonds and debentures, but not notes of whatever class or duration. ‘Merger or consolidation * Merger or consolidation means: © The ordinary merger or consolidation; or © The acquston by one corporation of al or almost al the Prope af another eorporeton solely for stock (facto merger) * “Transfer of substanti th ests? mean the sutton of substantt ax aot ofthe ase, ncung cash, Of snatser corporation: which Rs te element of permanence ‘and not merely momentary holding. (RMR 1-2002)raXING: “Tax MADE LESS 7 i A REVIEWER WITH CODALS AND CASE: m2 ation continued where the new cOrpor to + A corporate merge Nor the obd corporation IS Ot Subject jg operate 5 of the oer must De undertake 2 Buti, GR. No. L-sae as done to extend the is, capital gains tax. The fscaping the burden of taxation. (CTR secaning esse wnere Sa eatin is wes + How does a statutory me J o0e:s of ary Dravon, © Ine" bany’s Oragony Fon'Sauh, Ine: ee exchange, Dany’s Dragons, Inc. then dissolves and distributes Sees stances. erence between a de acto merger v8 o Ina de fac cers the dese. hese, the Croatoa ofa the transferee fa ne on andum Ruling [RMR] 12002) «ference between defacto merger va transfer toa contro coorsion © Ina de acto merger the ranstroris 3 thelatee te rotor may bean nv ° Transfer for contro! ‘+ “Control” means ownership of stocks in a corporation possessing at least 51% of the total voting power of all classes of stocks entitled to vote 1 nized even when the transferor aca Fporation at the time of the e» Development Corporation, G.R. No. 163653 INCOME Tax. she transfer of assets by one cor Tove 2 business purpose (Sebati anether must kewise January 7, 1935) - Helving, 293 U.S, ‘0 It must not be a mere device: corporate reorganization |” #4 tes masquerading as Administrative requirements for tox-free exchanges You have to subi © Sworn certificat 1 basis of property to be transferred; 0 Certified true copies (CTC) ofthe Transfer and/or Condominium Certeates fics nate THE 0 CTCofthe corresponding tax declaration to be transferred” laration of the real properties © CTC of the certificates of stock evidencin. be transferred; and idencing shares of stock to (© CTC of the inventory of the pro ns ae Property to be transferred (R.R. kari, ¢ Flipio businessman, 's engaged in the business trea feriealion and repo oF LG ier anes He concece Business under the nar tnd sie of ere Entree 3 Single proprietorship. Started ony ve (3) vas age te sess has gronth 20 enor tat Kart Seed to eeorperatef by transferring all the ase of te buses, party te ventory of goods an hand, machneres and equoment, soles par, (an materials, afi frre and hrashngs, lies Cus ond ther vehiles,bulcings, and tools tothe new cooraton, Keritos Enterprises, Ine in exchange for 10% af he capa! sco the ew corporation the sock sbscrpton 0 nich shal be deeed fy pan te for of teases tancetred tte corporstion By rah 45 a resut, Kero’ Enterprises, the sole proprietorship, ceased {0 do business ond apple for cncoatan ff BI Certeate of Regt Prowever, sessed Karka VAT 0 oct of the eesaaton of business bose on he cent market prio he 1s the transfer subject to income tax? (2018 Bar Exam) ‘Suogested answer: The transfer isnot subject to income tax. The Tax Code states that no gain 's recognized when property is transferred 0a corporation by a person in exchange for stock, the result of which 's that said person, atone or together with others, not exceeding four 2ppened in this case. Karito transferred al is assets in exchange ‘or all the shares in a corporation, It @ tax-free exchange.ans: “ax NADE LESS TITaND CASES 224 ‘apeViEWER WITH 4 900-square meter commercg 8 transferred his ownerstiP OTP) ac Cor., @ family Corporation ep etre dor apartment © Cn exchange of 10,00) Te tans acquired 51 98 ownershp Sots not om the exchange, MAINES TF neernal Revenue, en Ceeme aloed under the OW. The tots seme amounted t0 tay evasion. aearp pay tcc on te excange? Exit (2019 Bar Exam) answer: B "t pay taxes On eae ee a i PR Seem seoe tegatana apes ees ete ce (ei ae a pret a (era oe Sion ome ‘Exchange Not Solely in Kind INCOME Tax + Explain an exchange not soley inkind ina mer © Itinvolves an exchange of property NOT 0 In other words, the absorbed corp. PLUS other property (cash oF non property. nes receives stocks exchange for its What if instead of P15M stock plus PIM cash, Seo Dan, Ine. is given PBM stock plus P7M cash? ‘+ No gain, since none was realized anyway. ‘Assumption of Liability in Tax-Free Exchanges (4) Assumption of Liability. — (2) If the taxpayer, in connection with the exchanges described in NOT be treated as money or other property, under the exception of the Section 40(C) and no 9 recognized.2 2 6 rAKING: “ax MADE LESS TAXING! 6 [AREVIEWER WITH COOALS AND cunt of the liality assumed exceeds the transferred, then the e used Das of the properay ether @ capital asset or st is consicer ordinary asset — ery Tp By rae ny ala a chang ee ye plus Tampa Bay Piratas, Inc. assumes Tomas ay Co a 2) The basis of the stock or secures received By the transfers tpn the exchange speed nthe above exception shall be the same t2ihe esse he ope oc recurs exchang mong the several asses of stocks of securities. basis ofthe property transferred inthe hands ofthe transferee be the same as it would be In the hands of the transferor increased by the amount ofthe gain recognized to the transferor on the transfer Remember that tax-free exchanges merely defers the recognition of gain or loss, (© When the transferor later on got tax-free, the bas Substituted basis, transferee later on INCOME Tax, = 1s The term “boot” refers to the ea ene et sa «How to compute the substituted basis: 41. Take the original basis of the property 2. Subtract any money or the FHV of any have been received aside from the shon 3. Add the amount treated as dividend by the sh any gain that was recognized onthe exchanoe Property that may tock Example: Jungbong Jonas transfers property to Soju For Days, Inc. for shares of stock. The property's sale value was PSM and ungbong of inventor If he sells the shares to Madonna Jinju for P6M, hi (PEM ~ P4m) = P2M and it wll be subject to capital N. Fringe Benefits Tax ‘Sec. 33. Special Treatment of Fringe Benefit. — Grossed-up value the actual monetary Detween one hundred percent (100%) and the Income tax under ‘amended by TRAIN)‘TAX MADE LESS TAXING: [AREVIEWER WITH CODALS AND CASES ee or purposes ofthis Section, the erm (2) Fringe Benet deine. t pce ater benef further “rnge Dene means ary Goad yer oan individual employes ‘granted in cash or in kind love 2 aren) uch 86, Ra cept rank and le employees 3 ited to, the following: Household personnel, such as maid, driver and others; interest on loan at less than market rate to the extent of the rence between the market rate and actual rate granted; ‘Membership fees, dues and other expenses borne by the lover for the employee in socal and athletic clubs oF other similar (C) Fringe Benefits Not Taxable. — Th ‘are not taxable under this Section: (1) fringe benefts which are authorized and exempted from tax Under special laws; utions of the employer for the benef wing fringe benetes the employee to (2) Cont retlremer 1nd regulations to be promulgated by the Secretary of Finance, upon recommendation of ‘the Commissioner. ly the provisions of this nature and special need of ‘OF profession of the employer. ‘+ Fringe Benefits Tax (FBT) Is @ final income tax: © Imposed on the managerial/supervisory employee, © Withheld by the employer who fl sd who files the return and remit ‘ax within 25 days from close of each calendar quarter INCOME Tax - 29 re 0 Sins ei cet gts file) such as: yee (except rank and ee : Interest on Joan at less than market rate, to th rate, tothe extent of the difference between the market rate “ cu Be a and the actual ate 6. Membership fees, dues and other expenses in social and athletic clubs or similar organizations 7. Expenses for foreign travel 8. Hol yy and vacation expenses 9. Educational assistance to the employee or his dependents 410, Life or health insurance and other non-life premiums in excess of what the law allows. + This list isnot exclusive, How do you compute for the FBT? Remember that FBT is a final tax of 35% on the grossed up monetary value of ringe benefits. © Thefringe benefittax onthe taxable fringe benefits computed as follows: Determine the grossed-up monetary value of the fringe benefit, ie., the monetary value of the benefit divided by 55% Compute the fringe ben ‘grossed-up monetary value ‘Actual Monetary Value/65% = Grossed-up Monetary Value ‘Grossed-up Monetary Value x 35% = FBT TRAIN increased the FBT rate to 35%. © The grossed-up monetary value of the fringed benefit is now divided by 65%. For nonresident aliens not engaged in busines in the Philippines, the FBT rate Is 25%. (RAR, 11-2018)° XING: “Tax MADE LESS [A REVIEWER WITH CODALS AND CASES the of 35%. ‘The fringe benefit is also an expense which is deductible from thy employer's grass. incame. (©The deduction for the employer Is the grossed-up monetary value of the fringe beneft. ‘The following benefits are not subject to the FBT: 1 benefits which are authorized and exempted from Fingering he NIC or unde sped ow. Separtin benefits which are given to employees who are involuntary ‘separated from work are not subject to FBT. Contributions of the employer forthe benefit of the employee to retirement, Insurance, and hospitalization benefft plans; Benefits given to rank and file employees, whether grantes under @ CBA or not; ‘De minimis benefits (more on this later); . Benefits granted to employees as required by the nature of, oF necessary to the trade, business or profession of the employer . Benefits granted for the convenience of the employer a. Housing privilege of military officers inside or near the military camps; . Ahousing unit situated inside or at most 50 meters from the perimeter of the business premises; © Temporary housing of an employee for three months or less; d. Expenses of the ‘employer which Receipted under the name of the employer and Not personal expenses of the employee; e-Business expenses which are paid for by the employer for the foreign travel of his em . ployees in connection wi business meetings or conventions. (RR. 3-196) 'e benefits above may be exempt from I form part of the employee's gross 'come which is subject to income t2 ployee which are reimbursed by the (RR 3-1998) INCOME Tax. an © However, note th tate minis exempt from inca ea? Minimis benefits. are + Some tidbits from R.R, 13-1999 ‘On housing privileges Monetary Value TF employer leases 2 residential property forthe use ofthe employee Sad the property isthe usual place of residence of the employee | 50% ofthe monthiy rental pata the employer purchases ntial property on installment basis and allows the employee to ‘se [eas his usual place of residence (equistion x 5%) x 50% if the employer purchases a residential property and transfers ‘Acquistion cost or FMV, whichever is higher. I less than ER's cost: FHV: wno. stays for not more than 3 months. ‘ownership to the employee E's acquistion cost Housing of military officials Exempt Housing which is. situated inside | Exempt for adjacent to the premises of 22 business or factory (within 50 meters) ‘Temporary housing for employee | Exempt Hf the property belongs to the employer (Market value or zonal value x 5%) 50% Expense Account ‘Subject to FBT oF not? If the expense was duly receipted for and in the name ofthe employer, {and the expense is notin the nature of a personal expense attributable to the employee If these are personal expenses such 25 groceries, paid for or reimbursed by the employer, even if these are duly receipted for in the name ofthe employer“Tax MADE LESS TAXING: 232 A REVIEW! IER WITH CODALS AND CASES ‘Motor Vehicles Monetary Value 1 employer purchases venice Inthe name of the employee, regardless of 700% ofthe value (acquisition cos INCOME Tax oo ums for Insuran pm sc} Monetary Value Exempt contribution is pursuant to ing law such a to the GSIS or Usage of the vehicle If employer shaulders 2 portion of mount of the purchase price of "amount shouldered by the employer 150% of the value Use of aircraft owned and maintained | Exempt by the employer Use of yacht Value based on depreciation Monetary Value Exempt ‘Exempt 30% of the value Travel expense of family members of the employee. 100% of the value ‘dependents and hrough a scholarship, ‘Educational Assistance Monetary Value employee was rm by the — was extended to | Exempt ‘rogram of the company. forthe group insurance ofthe | Exempt employees ‘ife or health insurance and other | 100% rnorelife insurance + For the others (household expenses, membership fees and other expenses in social and athleti cubs, holiday and vacation expenses), the monetary value wll be 100% ofthe value of the benefit received. De minimis benefits + De minimis benefits are of relatively small ‘employees, romoting heath, goodwill, contentment, or effcency of the employees. (R.R. 3-200) 1s love a de minimis benefit? Doesnt matter, because love can’t be quantified in pesos—unless you're a gold digger * The following are considered de minimis benefits of ALL types of employees. These are exempt from tax. (R.R. 82000) 1. Monetized unused vacation eave credits of private employees, not exceeding 10 days per year 2. Monetized value of vacation and sick leave credits paid to government officials and employees. (RR. 5-2011) 3. Medical cash allowance to dependents of employees not exceeding Pi,S00/employee per Sem or P2S0/month. (RR 11-2018) 4. Rice subsidy of P2,000 or 1 sack of 50 Kg rice per month Ammounting Yo ot rore than 2,000. (RR. 11-2018) 5. Uniforms and clothing allowance not exceeding P6,000/ month, (RR. 11-2018) 6. Actual yearly medical benefits not exceeding P10,000/month.NG: ‘Tax MADE. Less TS AND CASES sei indry allowance not exceeding 300/month. anise achievement avers ro” fengt of SA 8. Employee at tne form of tangible propery tO Stn yan ns 8 : christmas and major anniversaries nop Iv meal aliowance for overtime work, not exceeding 254, ag ; 2 ees by eof eg - see ceed oy ete ond Song ae alam bh Ca re eT ener a +The amount of de minimis benefits is not computed in determining benefits” excluded from gross )of the Tax Code. ing over past multiple the last. The barriers are your cellings—the ‘and the P80,000 ceiling, Anything past those barriers is taxable.) * Any amount given by the employer as benefits, whether dé ‘minimis oF other TorzoGay, Cnet shal be deductible as business expense. (RR To recap: © Fringe benefit given to rank a aa ToaRy Pent gven to rank and fle employee is not sub © fringe beneht given toa su a supervisory or ee IS subject to the ge beeee rY OF Managerial empor INCOME Tax, 235 0 De minimis beneft, whet fr to supervisory or may the fringe benefit tax. ther given to ape enk 2d fle employee lovee, Is not subject to What are de minimis benents Wes amples oe mine on POW 278 these are? Give thee Same ae ee - eles eae te we estes adonieert ese ae ete ana Pecans are ; ‘Mapagbigay Corporation grants ali supervisors, and managers) 5% Its employees (rank and file, ciscount of the purchase price of contends that the discount is nothing more than 2 priviege and i fvaiment is restricted. een Js the BIR assessment correct? Explain Suggested answer: The BIR assessment exclusive. Hence, any beneft not inthe Ist is taxable, In this case, ‘employee discounts are notin the ist of de minimis Benefits, and are therefore taxable. Asto the supervisors and managers, these are subject fringe beneft tax. FBT is a final tax on any 900d, service, or benefit granted to ‘non-rank and file employees, tke supervisors and managers. In this ‘ase, the discounts are benefits granted to Mapgbigay’s supervisors land managers and are therefore subject to FBT. However, the FBT ‘hall be based on the grossed up monetary value of the Benefits, not ___the amount equivalent to the courtesy dlscount. ‘AS a way to augment the Income ofthe employees of DEF, In. the management seided to grant special stipend of P50, 000.00 forthe fst vacation lave that any employee fakes during a given calendar year. In eddtion, the senor engineers were aso given housing inside the factory compound fr the purpose Of ensuring that there are avallable engineers within the premises:Less TAXING! ‘TAX MADE ;AND CASES: 236 ‘A REVIEWER WITH CODALS ote factory machineries ang «a beakdow everytime thee ee tne housing facilities: received by the tee cash eqwalet Wa oe penetts tx? Expl. (2018 Bar ‘ear engines 2} aoe ibject to fr valves not subject 0 fi 5 Te Cas ea at housing for Suggested answer, TM Cae and ts rules state (72 19 for the Benes ox he Tx Cale 207 t Sabet (9 fringe Benes ta. of the mre ine premises of the compound and is wag 5 vege wh acto oreskdowns, Prvisezimor root ©. Withholding Tax «In ealing with withholding €2%, as not to be confused: ea ing tax system is embedded in a holding tay pines to ease the. administration is not a "separate” kind of tax, as 2 way of collecting tax (be it income fiscuss later) from the source. two things must be kept in ming withholding tax is tax or VAT as we ‘0 There are two kinds of withholding tax for income tax ~ Greditable and final withholding tax. It is important to know the difference between the two. + Difference between creditable withholding tax from final withholding tax (© Income subject to creditable withholding tax shall form par of the gross income to be reported in the ITR of the recipient ‘Tax already withheld shall then be claimed as a tax credit iie., to be deducted from the amount of income tax ‘computed according to the graduated income tax rates. (©. Final withholding tax shall no longer form part of the gross Income to be reported in the TTR. ‘The tax withheld, being a final tax, represents the true and actual tax due on the income, Generally, passive income are subjected to final taxes. Before we proceed, let us first discuss what a withholding agent is: See. 22 (K) The em "nhozing agent“ means any person reqred {0 deduct and withhold any tax under the provisions of Section 37. INCOME Tax. 2 + awit any tax. + Awithholding agent also has the refund for two reasons: ding agent isthe person required to deduct and withhold legal interest to file @ claim for of tax withheld is less than wnat i requred rw ot 0 Asan agent of the taxpayer, his authority to ; income tax return and to remit the tax witiven ean, government impliedly includes the authority to fle » + However if ever the winnoling agent does get the refund, the withholding agent haste obligation & rem the same to the principal taxpayer As a pee agent ot the taxpayer, he asthe aay ferret He hes recovered; otherwise, he would be unjust ennchn himself, yey oe ‘+ Isa person who withholds love a withholding agent? (© No. He or she might just not be ready to commit yet. Final Withholding Tax at Source Sec. 57. Withholding of Tax at Source. — (A) Withholding of Final Tax on Certain Incomes. — Subject to rules and regulations the Secretary of Finance may promulgate, ng t corporation a Inthe same manner and subject to the same conditons as provided in Section 58 of this Code. + Income subject to final tax refers to income wherein the tax due is fully collected through the withnol 1, wherein the ayor of the income withhole ‘and then remits it to the ‘government.238 1x MADE LESS TAXING: ‘a nevtat nti CODALS AND CASES « been withheld and remitted, there is ny INCOME tax payment ha ablgation a + Principles of Final withholding Tax (Section 2.57[A], R-R. 2-199) «9 The amount of tax withheld is full and final. 5 for payment of the t@x rests Primarily on the |__stock exchange UY TN INS agent as payor. Wderwithhola: —_—— 0 in case he fails to withhold (or underwithholds), the Nonresident Alien e Withholding agent will be liable for the deficiency. [eect see eet in trade or business * Tnterest under the ex me 0 The payee is not required to file any Income tax return for the 4. nbereet under ‘panded forelan currency = particular income. depo EE Exempt Royalty from books, itera ‘0 The finality of the withheld tax is limited on that z v ind. musical income and will not extend to the payees’ other ity |COMPORIONS, dose ‘on said income. 3._Royalty other than above om + For example a bank received income subject to final “Interest on any current benk depos, ye For exare a, the same income can stl be subject to tmonetary berets tom depoce abe 20% percentage tax. fund and similar arrangement «+ Basically, items under passive income are subject to FINAL Tax. 5, Prize exceeding P10,000 BN And Ju have other FINAL TAXES here and there (like the FBT, BPRT, Capital Gains Tax, etc.). Anyway, here’s a rundown, 6. Other winnings, except Phil. Charity Sweepstakes 20% Tncome Subject to Final withholding Tax of Final 7, Dividend from a domestic corp. or from a ont stock CEVIZENS and RESIDENT ALIENS. oe T. Interest under the expended foreign curren deposit system . gd a 2. Royalties from books, erary works, and musical Soebe tos FY work, and musical 10% 3._Royalties other than at 8. Capital gains from REAL PROPERTY located here 6% jae ee 20% Cibsied as CAPITAL assets = posit, or other monetary benefits from depost substitute, trust on 9. Capital gains from sale of shares of stock of @ 15% ‘Similar arrangement domestic corporation, not traded through @ local 3. Prize exceed Stock exchange —e = er wine pt Phil. Charity Swee and Lotto winnings epstakes| 20% ft as antigo 1.000 o et Nonresident Allen NOT engaged in wade or business 7 25% 10% oe ‘Capital gains from sale of shares of stock of domestic | 25% Corporation, not traded through a local stock exchange‘nonresident owner or lessor of citizens oF corporations e5Sels to Filipino © Thus, it is when the right to receive income arises that determines when to include that income as gross income, 55 TAXING: TAX MADE LESS TAXI Cases INCOME Tax bait REVIEWER WITH CODALS ee eee see ee eer a Pinan] Final Tax a= nena ‘Domestic Corporation Dividends from a domestic corporation (a reign currency 15% mutual tax crecit) subject to To inmerest under the expended Fore epost system Fanterest on foreign loans = [Tar Roya ofa ypes wit ee Pinines 20% ‘Gthew. % ‘© Royalty trom abroad, enters the taxable income cage eis Toes 30d tax rate uate 35% on growed eat, yield or other 20% ‘up monet [Interest on any current bank depos, yield oro 7 Interest on a a rom epost substitute, Cust | value {Une and similar arrangement | earaueah up monetary [Income BY A DEPOSITORY BANK under the FCDU 10% neta nonresident 5 Tine fom REAL PROPERTY located here % 3 "Ir CAPITAL assets (only applies to lands ‘nor bulcings) [Capital gains from sale of shares of stock of 15% afereners reve Gomestic corporation, not traded through @ local Stock exchange Creditable Withholding Tax Foreign Resident Corporations oa ‘under the expanded foreign currency 7.5% (8) Withholding of Creditable Tax at Source. — The Secretary of 2. Royaty of all types within the Fry © Royalty from abroad, exempted {axe from sources within the 3,_Tnterest on any curent bank depost, oom monetary bereits Tom depen mbeorste ree a fund and sitar arangem ae n fen percent (15%) ‘and similar arrangement fran) ™ ) Capital gains fom sale of shares semestecoperaton, ra vaced teughs teal] I ‘Stock exchange + Under the creditable withholding tax system, taxes withheld 3. Branch Prom anitancar ‘on certain income payments are intended to equal or at least 15% approximate the tax due of the payee on said income. ©._ Offshore Banking Unit a 10% Creditable tax must be withheld AT SOURCE, but should still be Foreign Nonresident Corp, included in the tax return of the recipient. Income from © Any excess shall be refunded to and any deficiency shall be lee Fe AL SOURCES win Pipes 30% paid by the taxpayer. ionvesdent — cnemato 7 Garrbutse M*eM=ogrephic im oner/ 25% The liability to withhold tax arises upon the accrual, not upon Sess ea actual remittance. The purpose ofthe withholding taxis to compel rentals, lease and charter fees by a a3 | the agent to withhold under all circumstances.242 0 The obligation of. Suess TAXING: ane Anh cooaLs ANO CASES ding tax. (Filipinas Synthetic Fiber ans nes ry a 8 oe 15195) the payor to deduct and withhold the tay xian O57 of these regulations arises at the time under Section fad or payable, whichever Comes Fist, the 2 noe ple’ refers tothe date the obligation Become’ dye, demandable or legally enforceable. Creditabe withholding tax intends to approximate the fax on the payee. © The subsea Income recipient. He ‘0 Simply, the payor withholds, and the payee gets credit. ‘Three types of creditable withholding taxes: © Expanded withholding tax on certain income payments made by private persons to resident taxpayers © Withholding tax on compensation income in the Philippines ‘© Withholding tax on money payments of the government ‘When expanded withnolding tax will apply: © Expense Is paid by the taxpayer, which is income to the recipient thereof subject to income tax; © Income is fixed or determinable at the time of payment; © Income sone ofthe income payments listed in the regulations; nd remital does not remove the burden on the nt still has to file for the credit. © Income recipient is a resident of the Philippines liable to income tax What if the recipient is a nonresident taxpayer? + Then income payment is subject to final withholding tax, not creditable, © Payor-withholding agent is also a resident of the So foreign embassies in the Phi ident ippines and nonresi matnnasePerations cannot be compelled to act 35 withholding agents (since gove pce WS targeting sae government cannot enfor The withholding of creditable withholdinc a ‘ income payments made to the follo eee © National government and ‘municipal corporations instrumentalities and pubic Income 1 a 243 EXCEPT GOCCs (0 Those enjoying exem; pursuant to law "Ption ftom payment of income taxes + Who are required to deduct and withhol withholding taxes? (R.R, 2-198) lt for the creditable - I person, whether or not engaged in trade or respect to payments made in connection business But for the disposition of real property, even those not engaged in trade or business are withholding agents © All_ government offices including government-owned or controlled corporations, as well as provincial, city. and municipal governments, Examples of Income Subject to CREDITABLE Withholding Tax (eR. 21998, ss amended) (ote: Ths 1s not an exhaustive it ond’ provided for istrabon and reference. Ifyou nant the OG ist check te Velevant RRS) Profesional fees, promtional and. tlent_fes, fendered by Indviddols, entertainers, ond athletes (RR, 11-2018) Inavidual payee: 1 gross income for the current year's more than| 10% 3,000,000 or VaTeregistered regardes f amount W gross income for the current yeor did not exceed | 5% 000,000 mh. 4.2018) Non-individual payee: If gross income exceeds P720,000 = gross income is equaltoor does ntexceP720,000] 10% Rentals for continued use or porsession of reall 5% Properties sed In business, which the payer Mae ot taken ie ‘Aso applies to rentals of personel property 3 a, ransmsion Cinematographic film rentals and other payments 5% Income payments in contractors, general 2% fraineerng, general bulding, specaly and otter {contractorsnxn: rac nave LESS ee a“ ‘A REVIEWER WITH ‘CODALS AND CAS ies of estates and 15% final withhold OF ‘rusts (exe Peserreeeeent texcerenv prokers and agents, 10%, eave oye © GPE tean "comer aaa paymen yi rig On, sdatonal pave government: personne ft overtime services iacard company to any] 1% of 1/2 of the 1e amount paid by any credi a te amount paid bY a resale of goods, services| gFOss amounts Business entity representing the ee Sa ee 8 | TENT tes sem hale wae ror sn ete |__| mi i erates ae ig ap | ORE Payers ete 27 GD Canae aa | ne 2018, as amended by R.R. 07-19) 8) Sane aggre ais | Te oma TN asan ae ae = et [income payments to partners of GPPs If gross income exceeds P720,000 15% Ifgross income is equal to or does nt exceed P720,000 10% (RR. 30-2003) ‘Income payments made by poltical parties and 5% Candidates for all purchases: of I purchases intended to be glen 95 cont jon (R.R. 10-2009) . oe ees come om ehe_natenis eos sable or fom tore (R.R. 01-2019) ue Return and Payment of Tax ‘See. 58, Returns and Payment of Taxes Withheld at Source. ~ Qi oeartery Returns and Payments of Taxes Withheld. — withheld under Section 57 by withholding agents eee never EEREEEE PERCE CSFEEE ECTS —_—_ont wrote under Section 57 by withholding agen INCOME Tax 245 eee eegeee nee HEE ‘shall be covered by @ return and pald to, ‘thers per xcept in cases where com ner pts, Buthorsed rescues ers em or pe ce of business, or unre the nar sea resicence Peeves collecting officers. Ire ou tale et aires sae oa the close of the quarter during which the withhold ade ime a sre ns (8) Statement of income Payments Made and Taxes Withne every atoling age reauredn easter oe vax ary 31 of the succeeding year. approved by the Secretary of Finance, upan recommend withthe requlrements of sou the tax du tur aid in accordance with the provisions of Section 56.xn: x MADE LESS it anevidn art COOALS AND CASES coin a oa ol Sal Ta rs tia ca ery canard inertia eS not agin eye aca © sane he conc oF creda wom as may be required by rules and regulations to be pres ‘the Secretary of Finance, Gon recommen cation of re ne sa rae 12, ane information os may be required by rules and regulations to prescr ‘Secretary of Finance, upon recommendation of oe mesonen th rw by the Register of Deeds at the the Commissioner, shall be anno Withholding agents must fle a return and pay to: (© An authorized agent bank (© Revenue district officer Duly authorized treasure of the city or munici resides or has his place of business These taxes must be maintained in a separate account and NOT ‘commingled with any other funds of the withholding agent. TRAIN has amended when to file and pay taxes withheld at source. lity where he © The returns must be fled and the taxes paid not later thet the last day of the month following the close of the quate during which the withholding was made- For example: ‘+ Withholding was made in February (which is in the frst quarter of the year), then the deadline for fli the return and paying the taxes is on the last day April (which is the month following the close of te quarter) i INCOME Tax if there is any excess, If there is deficiency, i shall be either credited oF refunded, ‘hen It shal be paid by the taxpayer 2 Gp eds» we ai Beast nny te one rain me 106 000,000.00, wich ears Se nae {a 20% final withholding tax onthe ateeee aa sbet XYZ Corp. terest income received by Who are the withholding agents in the case of: 1. th ‘ tne 20% fina! withholding tax; and 2. the 2% crevtable 5 wannotang ax wrenholdng tax? Explain, Suggested answer: Under the withholding tax system, the income payor must withhold. Hence, or the 20% final withholding tox, tne withholding agent is ABC Bank as the income payer forthe interest ‘on the trust deposit. For the 2% CWT, the withnoleing agents RYE (Corp as the income payor forthe interest payments onthe an. Withholding on Wages ‘+ Applies to ALL EMPLOYED INDIVIDUALS whether citizens or aliens (except nonresident aliens not engaged in trade or business) deriving income from compensation for services rendered in the Philippines. (R.R. 11-2018) (©The withholding of wages applies to government employees ‘as well. (COURAGE v. CIR, G.R, No. 213446, July 3, 2018) * The employer is considered the withholding agent. (R.R. 2-198) (©The term “employer” also refers to the person having controt of the payment of the compensation in cases where the services are or were performed for a person who does not ‘exercise such control, such as when the compensation is paid by a trust. (RMC 39-2012)248 “TAX MADE LESS TAXING: ‘A REVIEWER WT ITH CODALS AND CASES. private home, oF 1 domestic service In @ Cenee he course of the employer's trade op (3) For casual labor not in t actizen or resident ofthe Philippines for 8 foreign eres ternational Oanizaon- eet period shat arto an employee for services performed during more tan one ‘any such payroll period does not constitute ‘employee for such period shall be deemed to be wages. the remuneration sol pred ether thon, 2 ea, weekly, biweekly, semi-monty, onthiy quarter, semiannual, or annual period. (C) Employee. — The term ‘employee’ refers to any individual cludes an officer, | performs or performed any service, of whatever nature, joyee of such person, except that: performs or performed any ment of the wages for such ces, the term “employer” (except for the purpose of Subsection ‘means the person having control of the payment of such wages; In the case ofa person paying wages on behalf vidual, foreign partnership or foreign corpore {rade or business within the Palippines, the term “employer” (except for the purpose of Subsection (A]) means such person. ‘Wages are all remuneration other than fees j 3 paid to a public of WeegRrices Performed by an employee for his employer (ash © EXCEPT * Agricultural labor paid ent uid ‘ere aber pagent ft INCOME Tax Domestic Service in a pate home Casual labor notin + Service by a ctizen ore ci foreign government or tense + Backwages, allowances, and benen are considered income of the e to withholding tax on wages. (RNC 39-2010) "© COURSE of the employer's trade or Ns awarded in a labor disput mpioyee and are therefore susject ‘Sec. 79. Income Tax Collected at Source. — Withholding. — Except in ifennotding, = Excent in the case of a tor any pray or Jon to the tax there pps epee Ser ens 6 deduct and wid (©) Retunds or Credits. — (2) Employer. — When there has been an overpayment of tax under this Section, refund or crecit shall be made to the employer only to the extent that the amount of such overpayment was not deducted ‘and withheld hereunder by the employer (2) Employees. — The amount deducted and withheld under this fifteenth (15th) day of Apri. Refu shall earn interest at the rate after the lapse of the three-month period to the date the refund of {redit is made. ree annaaaiie See also Section 2.78. ‘f8 exempt from the requires 2.1998 for more income payments which hvlding tax an compensation.J vess TAKING! ane TH COONS AND CASES “warrntsarown by the COMMSSiner gr be made up wpe out the necessity Of counter Dy diy auroras re conmsson on, A OF the ters ignature fentative as af excepto’ quirement Ay authonze rere oer 6, suite , Tle of Book Ve Proce by Sect > ae Krown 28 the AGnstratve Cade Bese oder. 292 oe af Hiss ae The Commissior (2 manning or ee peated Oye Seca ener pe saps ch wb pa 10 2 eT ay et ee yes te anoum edie and uo oy det ne euch employee during such auarer 23 the Bavment of aes She wopes so extmated constuted the atl vag pad on educ and witha upon any payment of wages to such atu en guar suc amount 98 may be reared a See 8 ths ering Such quarter witout Fegard 0 Me Stonecon. (4) - repealed by TRAIN (©) Nonresident Allens. — Wages paid to nonresident len Individuals engaged in trade or business in the Philippines shall be ‘subject to the provisions ofthis Chapter. (1) Year-End Adjustment. — On or before the end of the lendar fender year or refunded to the employee ‘ot later than January 25 of the succeeding year. General rue: Every employer making payment of woges sl deduct and withhold from wages. re © Except for Minimum Wage Earners Refunds or credits © To the employer: when there was an overpayment but oni © the extent that the amount of overpaymn tine by the employer. center etee INCOME Tax, 251 9 To the employee: any exc refunds will earn interest at 6% per annus mer 15, these the three month period. . Annum after the lapse of ‘Sec. 80. Liability for Tax. — Giese hentai bad oy pare ena we Site ea eae i ce ete for tne withholding red tobe deducted jayer f employer together withthe p applicable in respect to such (B) Employee. — Where an employee fais or refuse the withholding exemption certificate oF ote the date of payment. On the other hand, excess taxes withheld made by the employer due to: (1) failure or refusal to fle the withholding exemption ot be refunded to the employee but shall be forfeited in favor of the Government. Employer shal be collected fr Employee shal false information shall be forfeited to the government. Sec. 81. Filing of Return and Payment of Taxes Withheld. — Except as the Commissioner otherwise permits, taxes deducted and located. in twenty-five ‘The return shall be fed and the payment made within twenty fe (25) days from the close ofeach calendar quarter: Provided, owrever, tthe Commissioner may, with the approval of the Secretary282 iG: ‘TAX MADE LESS TAXING a neviewen WITH CODALS AND CASES INCOME Tax, 253 players to pay oF Gepost the taxes wloveraquent intervals, i CaSeS were to protect the interest of the ‘of Finance, require the er Sedueted and withheld at more fred deg equirement is deemed necessary Government reins saan a tana Said collecting officers. ‘Should be fed and paid within 25 days from the close of eas, calendar quarter. ‘A section in an RMO making the governor, mayor, barangay Captain, or officials holding the highest positions In GOCCs er agencies the withholding agents for the wages of government employees Is invalid. These positions do not have control of the payment of wages, The proper withholding agents are the treasurers or accountants, (COURAGE v. CIR, G.R. No. 213446, July 3, 2018) Sec. 83. Statements and Returns. — 1. — Every employer required to deduct and In respect of nis succeeding year, or If hs empl ‘on the same day of which Wweitten statement confirming fu other Such for Secretary of Finance, upon the re ci inance, commendation the Commissioner, may, by rules and regulation, prescribe (2) Annual Information Returns. — Every employer reared (2 the wages of his employees each employee, the total amount of ta the year, accompanied by copies ofthe (€) Extension of time. ~ Te Commission rant to any employers reascnoberdeneass Seni the atemerts and rere ene jons as may be promulgated by the Sec «Employees must submit annua reun ‘etun on or before aru the succeeding year contanng al eleven employes niaaton P. Returns and Payments of Tax Individual Return Sec. 51, Individual Return. — (A) Requirements. — ‘exercise of profession xcept as provided In paragraph ing individuals are required tof Every Filipin citizen resising (b) Every Filipino citizen residing outside the Philippines, on his income from sources within the Phippines; (©) Every allen residing in the Philippines, on income derived from sources within the Philppines; and (a) Every nonresident alien engaged in trade or business or in the the Phibppines. Who are required to file? 1 2 3 4 Resident citizen, on income within and without the Philippines Nonresident citizen, on income within only Resident alien, on income within only Nonresident alien (engaged in business here), on income within onlyING: TAX MADE LESS TAX! [A REVIEWER WITH CODALS AND CAS! al wnose taxable come does not exceed nal ese jase (P250,000) under Section sco, That 2 ctizen of the Philippines and any ines shal ross income; (As amended by TRAIN) al wih respec 1 pure cOmpenston sil or A, ered tom aih he moe axon nich nas een ‘an individual whose sole income has been subjected to ing tax pursuant to Section 57(A) of this Cc special. (3) The foregoing notwithstanding, any individual not required to (As amended by TRAIN) ‘TRAIN has amended those who are not required to file income tax returns: (© Those whose taxable income does not exceed P250,000 * But those engaged in business or practice a profession must stil fle, regardless oftheir gross income ‘© Purely compensation income earners * But those with two or more employers at any time durrd the taxable year must still i i x return mena file their income ta) (© Those whose sole incom 2 final witnnolding toe has already been subjected to © Minimum wage earners INCOME Tax Indicate whether each ofthe fiom aay required to file an income tax return, viduals ae 2). ip cftzen residing outst the Pritpnes item sources use the Ppocs PMPBINS ons come by) Resident aien on income der Prippines ©). Resident ctizen earning purely compenseton incom employers within the Philpines, whose reane (eee or ene correctly withheld, Eee @) Resident citizen who falls under the classifcaton of minimum wwage earners. €)_An individual whose sole income has ‘wthnoiding tax. (2015 Bar Exam) me Suggested answer: 42). He need not fe A Filipino ctzen resting abroad only hast fle an income tax return on income fram sources within the Phlppines »)_ He Is required to fle. A resident ain must fle an income tax return on income from sources within the Phipines. ©) He is required tole. General, a resident tizen earning purely Compensation income need not fle an ITR. However, Ia resident titizen derives income rom two or more employers (28 the case here) at any time during the taxable yor, he must he an income ax return. 1d) He need not fle. Minimum wage eemers are not required to fle TTR, as per the Tax Code. ved from sources within the €) He need not Me. Individuals whose sole income has been ‘Subjected to final tax need not fie an TR as well, 28 per the Tax Code. Sand foreign workers. The company Ma employees” salanes ore paid m he currency ofthe coUNEY where they ae assigned or deta. Below are some ofthe employees of KKL. Ostermine wheter the oa 2017 is taxable under toto returns wth 2 Filpinoaccourtant Inks Tox Department in ee cts Fuioengiea 0 909 255° ING: ‘Tax MADE LESS TAX “AREVIEWER WITH CODALS AND CASES ‘Department in its Makat! office: war at 2 eo a 1 ford 20 ara, indonesia, which project fs expected to be fe a a apie pee rr sort ass te, estes ete bra an, st ete Ie i Ra pe Pa ee {eon olan act Da Cees sergeant Suggested answers: kris Konejero's 2017 compensation is taxable, as Kris is a Fesident clizen and resident cizens are taxable for their income from worldwide sources, Kris does not have to file a tax return, {5 Kris qualifies for substitute fling as he (or she) is an employee receiving purely compensation income from only one employer for the calendar year. Kiaus’ 2017 compensation is taxable, as Klaus isa resident alien ‘and resident allens are taxable for their income from Philippine 42 resident citizen and is taxable for Income from worldwide ‘rom abroad and whose "employment thereat” require him tobe ‘pyscaly preset for more than 183 days. He's stil employed by alcal company, hence the requirement of being “empoyed {hereat”’s not met In any case, ne does not have to fe 2 f3 return, ae quis or substi ng a he san empeyee FEEGine rly compensation income trom ony one emBloe™ Komi’s 2017 compensations taxable, sri Is taxable, similar to Krstanto’s. He ‘sla resident cian ands taxable for ncome from wortdce INCOME Tay, len engaged in trade or business In income derived from sources within the Sec. 54. (A) (5) - The income tax return (ITR) shall consist of a ‘maximum of four (4) pages in paper form or electronic form, and shall (B) Total gross sales, receipts Services rendered, conduct of 2 Profession, except income subject to final tax as provided under this, Code; (C) Allowable deductions under this Code; (0) Taxable income as defined in Section 31 ofthis Code; and (€) Income tax due and payable. (As amended by TRAIN) SEC. 51-A. Substituted Fling of Income Tax Returns by Employees Receiving Purely Compensation is Individual taxpayers receiving purely compensa regardless of amount, from only one employer in the the calendar year, the income tax of which has been L_the calendar year, the income tax of which has been winnelé _rc MADE LESS TAXING! sane etn EODALS AND CASES means eas cree ace ey el eae sad ig id employees. (As amended by TRAIN) employer dur grployer eof inhaling by their employers w the words of Eliza Hamilton, be enough. ‘on Aon 30,2015, Dar! reigned asthe production manager of Oe fet 30 Ogun studio owed by SSS Entertainment Sender arene sued to her 9 Cetcate of Withholding are pensation (BI Form No. 2316), whi showed that Pe corre om ber crmpenation was equa ther Income ie itn perf Janvery 2015 to April 30, 2015 ‘Amonth after her resignation, Dary| put up her own studio and started Droducing short hms. She was able to earn a meager income from her shore fms but cid not Keep record of her production expenses, 1s Dary! quale for s your answer. (2017 Bor Suggested answer: Daryl is not qualifed for substituted fling Substituted fling ts only applicable to employees receiving purely ‘Compensation income fram only ane employer forthe calendar year. Daryl is not a purely compensation earner because she also ears Income trom her studio. Mr. Cis employed a5 9 Chet Executive Ofcer of HNO Compan receiving an fe teeing on ann crpasation f #10,00,000.00, whe Mr Soneniaon P0006, Bch of Tah sare ence 000.0. Both of them source their ‘only from their employment with MNO Company. ae 2) At the end ofthe year, is Mr ‘2nnual income tax return? Baplawy © PETSONONY required to Me an b)_How about Mr, S? ersons income ax return? Explain. (2049 bar on) a Me a” ann ‘Suggested answer: 6 kot pos rats 2a annua ine w Lt Hi somal ‘elu Employees reeching purely compensation come 0 ore edi ie ceca yar donot hoveoe to Mr. C, hence he need not file a INCOME Tax a i Peco where and when to file when the donor's tax has been ‘transfer of such property is exempt from donor's ta. (F) Persons Under Disability. — Ifthe tax02 NS own return, the return may be made by his“TAX MADE LESS TAXING: "AREVIEWER WITH CODALS AND CASES INCOME Tax. erson charged with the nr other Sz veprcerative ory the quran cere person property, ep cing the es ina te gn ed oreonen, ase or aude vspweture presumed correct, — Te fact hata dials (6) Signature Presser sol be prima facie evidence fora purposes th sctually signed by him. purposes thatthe return was 2 where to file? 1. Authorized agent bank 2. Revenue district officer 3. Collection agent 44. Duly authorized cy treasurer where he is legally residing 5. Office of the commissioner When to file? © On or before April 15 of each year What if husband and wife? ‘© Those married individuals who do not derive income purely from compensation shall file 2 return to include income from both ‘spouses. But if impractical, then they may file separate retums. How about parents and kids? + Parents must include the income of unmarried minors derived from property received from a living parent. 0 EXCEPT i, When the donor's tax has already been paid on such Property |i, When the transfer of such 3b from Wen te such property is exemp! When to pay (applies to both individuals and corporations) See. ‘$06 $6-Payment and Assessment of Income Tax for Individuals (A) Payment of Tax. — (2) In General, — The total am : amount of tx imposed by tis Tite shal belpad by the person subject thereto at the tne te return sled? the sald agents and pay t 1@ Bureau of Customs the vessel and prevent ts dep is presented oa sufficient bond is fi iereby authorized to hold ‘ntl proof of payment ofthe tax ed to answer forthe tax due cee ee ees Soon unpaid becomes due ‘and payable together with the delinquency penalties (Asam pay (As amended by (3) Payment of Capital Gains Tax. — The ‘and prescribed under Section 2. requirements for such exemption In case the taxpayer elects and is qualified to report the gain by iments under Section 49 of this Code, the tax due from each iment payment shall be palé within (30) days frem the receit ion of any document transfering rel property shall be effected by the Register of Deeds unless the Commissioner or his duly ‘authorized representative has certified that such transfer has been reported, and the tax herein imposes, i any, has been paid. (8) Assessment and Payment it of the tax, The tax or shall be paid upon notice and demand from the Commians: 1 MADE LESS 115 AND CASES INCOME Tax 283 is 262 ‘a revise ATH CODA ced by this Tile exceeds th cp te tx imposed By th Tle © a 1 amount by hi poser upon Mis Fetur but the (2 ie ow 26 He BE ep nreased Dy he arc, amount so sown on the TEL Cre assessment leficiency, preusy assessed tS collect revioushy bated, eat, reture a serine reaad Tso OF SSF te eer, oF mo ret oF terete tax by the taxpayer UP which the tax ex¢ ston uz, then the amount DY made by the taxPe¥er, 1°24 (or collected without assessment) a5 amounts assed (0 iy asessed 0° cletes witht ney ba uch a4 gee byte aout PrevViNSy abate, assesment al fe peri repaid i espe of swhere-you-file.” Gg: tis “poyas-you-fle” and "37" in instalments ifthe tax due exceeds P20, + Aperson may Palen of whichis due on October 15, EG ences cee Fling of Return covering Capital Gains Within 30 days afer each rasa tomend hol coraohdated run crbeore Apr ‘Sale or exchange of stock NOT traded through the local stock exchange or dispoaton of eal property | Within 30 days following each a ae eee ‘or other disposition ‘Within 30 days from receipt installment {Gains received by installment | sec e ‘Annual Declaration of income tax for individuals ‘See. 74, Declaration of Income Tax for Individuals. — (A) In General. — Except 2s otherwise provided in this Section, very Individual subject to income tax under Sections 24 and 2518) salaries, wages and other fxed or determinable income, {and file @ decaration of his estimated income for tne curren year on oF before May 15 of the same taxable year. In get ‘employment income consists ofthe earnings derived by the from the practice of profession or conduct of trade of bus! ‘on by him as @ sole proprietor or by a partnership of which he i? 10 ctizens, with respect to income from on not engaged in trade nes, are not required to render a decaraton The declaration shall contain such pertinert information as the Secretary of na imumssioner may, by Tes commrmake rncratnents oho year under the rules and repuations presetbeg rgd 20 Bea nance, upon recommendation of ese te Stary of oy main) (as omen Sie ree GRaiduats. ~The amount of exsemated Zncome Tax by eee wk ict & ns nine ooh n recommendation of the % breserbe, An individual se seh tax retum is due to be fled. (As amended by Tain) tne meme (©) Defetion of Estimated Tax, — 10 e case ofan nevus, he {Eimnestimated tax" means the amount which ne wolves as income tax in his final ‘ome tax, he shal Mle {an amended declaration during any interval of instalment payment dates. Individuals who receive self-employment income must make and file a declaration of his estimated income for the current year on ‘or before May 15 0 Remember this because as lawyers we will go under this, Provision ‘Self-employed people do not need to file a new ITR on declaration Of estimated income tax since the annual ITR for the preceding year may serve as the declaration. Self-employment income consists of earnings from the practice of a profession or conduct of trade or business carried on as the sole roprietor or a partnership of which he is a member. Quarterly payment of income tax, in four installments © First at time of declaration © Second August 15 © Third November 15 © Fourth On or before April 15