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Taxation - Quick Notes - Finals
Taxation - Quick Notes - Finals
NOTES - FINALS
INCOME
COMPENSATION
INCOME
• INCOME EXEMPT
FROM INCOME
BUSINESS TAX (IE)
INCOME
INCOME ITEM
• INCOME
SUBJECT TO
OTHER INCOME
FINAL INCOME
PROFESSIONAL
TAX (IFT(
INCOME • INCOME
SUBJECT TO
BASIC INCOME
TAXABLE INCOME
Pertains to all income subject to basic and creditable
withholding taxes
REQUISITES (TAXABLE INCOME)
There must be profit or gain
It must be realized or received actually or constructively
Must not be exempted by law from income taxation
SITUS OF INCOME
1. Interest – interest from bonds, notes, etc
• Situs – residence of the debtor
x unidentified income
INCLUSIONS IN GROSS INCOME
1. Compensation Income – income from an employer-employee relationship
• Salaries
• Wages
• Emoluments
• Honoraria
• Taxable bonuses
• Allowances (Transportation, representation and entertainment
• Fringe Benefits –rank and file
• Fees (director’s fees)
• Taxable pensions and retirement pay
INCLUSIONS IN GROSS INCOME
• Commission
• Compensation for services on the basis of percentage of profits
• Commissions on insurance premiums
• Tips
• Marriage fees
• Baptismal offerings
• Sums paid for saying masses for the dead
• Other contributions received by a clergyman, religious workers, etc.
1. Regular compensation
• Basic Salary
• Transportation Allowance
• Representation Allowance
• Cost of Living Allowance (COLA)
• Personnel Economic Relief Allowance (PERA)
• Other employment income paid regularly per payroll period
2. Supplementary compensation
• Fees, including director’s fees
• Commissions
• Overtime Pay
• Taxable Pension/Retirement Pay
• Taxable Separation/Termination Pay
• Taxable Money Value of Leave Credits
• Profit Sharing
• Fringe benefits – rank and file
• Hazard Pay
• Taxable 13th month pay
INCLUSIONS IN GROSS INCOME
• Compensation income received after termination of employee-employer relationship –
still included in compensation income
• Fixed or Variable Allowances – included in compensation income, subject to BIT and
CWT
• Advances/Reimbursements for Travelling and Entertainment Expenses
• In general – not included in compensation income, given that
• It is for the pursuit of business
• The employee is required to account/liquidate for the foregoing expenses
• Excess of advances over actual expenses and not returned to employer - taxable
INCLUSIONS IN GROSS INCOME
• Premiums of life insurance, employee is the beneficiary (paid by employer) – taxable
income
• Benefits given by employer to employees – deductible expense to employer
• Tips and Gratuities – taxable income; but not subject to CWT
• Vacation and sick leaves allowances – taxable/compensation income
• Monetized value of unutilized vacation leaves credits of 10 days or less , private
firms(de minimis benefits) – not subject to income tax
• RATA – not a compensation
• Excess of RATA – taxable compensation income
INCLUSIONS IN GROSS INCOME
• Stipends of Resident Physicians – subject to CWT
• Service fees vs Royalties
• Payee has no proprietary interest in the property – service fee
• Payee has proprietary interest – royalty income
• Income/ gain from the exercise of stock options plans – compensation income, also
subject to CWT
INCLUSIONS IN GROSS INCOME
• Stipends of Resident Physicians – subject to CWT
• Service fees vs Royalties
• Payee has no proprietary interest in the property – service fee
• Payee has proprietary interest – royalty income
• Income/ gain from the exercise of stock options plans – compensation income, also
subject to CWT