INCOME TAX INDIVIDUAL TAXPAYERS

Income Tax
- National tax
a. imposed by the national govt
b. not local tax
- General tax
a. shall form part of the general-purpose fund, national treasury
- Ad valorem:
a. based on value
- Direct:
a. collected from one person and NOT to pass on the burden to another person.
b. Answers the questions, “who shoulders the burden of the tax?”.
c. Incidence and impact of taxation falls on the same person
- Excise Tax
a. Based on subject matter of the tax
b. What are the three subject matters?
1. Imposed on person – Personal Tax
2. Imposed on property – Property Tax
3. Imposed on an exercise of a privilege - Excise Tax
- Privilege to derive income in your activities

INCOME
- Gain derived from labor, capital or both labor & capital
- Derived from employer-employee relationship: compensation income
- No employer-employee relationship: business/ profession income
- Proceeds of life insurance is NOT income.

Who are the income taxpayers?

1. Individual Taxpayers
a. Natural Individual / Biological
(1) Citizen
1.1 resident citizen
1.2 nonresident citizen
(2) Alien
Any person who is not a citizen is an alien
2.1 resident alien
2.2 nonresident alien engaged in in business
2.3 nonresident alien not engaged in business
b. Juridical / Artificial - Corporation
2. Corporation
Conclusive

Premapassive (search kay tabag)

- law created this presumption, but it can be overturned by providing proof
- absence of proof means that the assumption applies to you

Who are non resident citizens?

- One who proves to the satisfaction of the commissioner of BIR either of the
following:
a. Left Ph during taxable year for permanent migration/ employment
b. Outside of PH during the year “most of the time” – majority of the year which
is ½ + 1 or 183 days & for employment thereat
c. Returning citizen
Capital Asset – any asset that is not ordinary capital ; capital gain or loss
Ordinary Asset - ordinary course trade or business ; ordinary gain or loss
1. Personal / movable
2. Real
3. Sale
4. Use

Final tax
- full & final tax ergo, to the recipient or the income earner, it is no longer
reportable in the income tax return. Why? Because the tax already withheld by
the payor, is the full and final tax.
- Passive Income from sources within the Philippines ; the one who pays the tax
must be located in the Philippines.

Creditable withholding tax – to the recipient of the income, should still be added in the
income tax return.