ITEMIZED DEDUCTION

(GENERAL)
MR. SAM BARBO
TAXES

TAXES

In general, taxes paid or accrued within the taxable

year in connection with the taxpayer’s trade or
business or practice of profession, are deductible
from gross income, with the exception of those with
respect to which the law does not permit deduction.
TAXES
TAXES
◆ Taxes which are not deductible from the gross
income:
1. From the provision of NIRC on Income Tax:
a. Philippine Income Tax
b. Estate Tax
c. Donor’s Tax
d. Special Assessment
e. Income Tax imposed by a foreihn country
TAXES

TAXES
◆ Taxes which are not deductible from the gross
income:
2. From the provision of NIRC on Percentage Taxes
and Value-Added Tax:
a. Stick transaction tax
b. Value added tax
TAXES

TAXES
◆ Estate Tax
 it is a tax impposed on the estate of an individual
who died.
 it is not deductible from the gross income if his
estate.
TAXES

TAXES

◆ Donor’s Tax
 it is a tax that comes about when a gift or donation
is made.
 it is imposed on the person who made a donation
 it is not deductible from the gross income
TAXES

TAXES

◆ Special Assessment
 it is a contribution required from a real property
owner whose real property was benefited by a
public improvement.
TAXES

TAXES

◆ Stock Transaction Tax

 it is a tax on a sale in a local stock exchange, by a
person who is not a dealer of securities, of shares of
stock of a domestic corporation.
TAXES

TAXES

◆ Value-Added Tax (VAT)

 it is a business tax on a seller of goods, properties,
or services.
 VAT is imposed on the seller, nut he passes it on to
and is paid by the buyer.
 the seller has no deduction (he did not pay the tax)
TAXES

TAXES
 the term taxes includes national and local taxes.
 it means tax proper only
 no deduction shall be claimed fro any surcharge or
penalty on deliquent taxes.
 interest on deliquent taxes although not deductible as
tax, can be deducted as interest expense.
TAXES

TAXES
◆ A tax to be deductible, must be a direct tax,
thus:
 it is a direct tax on the taxpayer
 if the law imposes a tax on a person, and another
person pays the tax, the payor cannot claim a
deduction for the payment
FRINGE BENEFIT TAXES

FRINGE BENEFIT

 is an employee’s benefit supplementing a money wage

or slary.
 it may be in form of:
1. food,
2. service, or
3. other benefit furnished or granted in cash or kind
FRINGE BENEFIT TAXES

FRINGE BENEFIT

 the main reason for fringe benegit to an employee is to

encourage the employee to exert his best effort for the
good of the employer.
 it may be discontinued or afjusted, unless the terms of the
employment contract prohibit such change, as the
financial condition of the employer dictates. (Salary or
wafe of a certain amount already given cannot be
reduced.)
FRINGE BENEFIT TAXES

FRINGE BENEFIT

 Is given instead of an increase in basic pay because of

considerations of :
1. overtime
2. separation pay
3. 13th month pay, etc.
FRINGE BENEFIT TAXES

FRINGE BENEFIT
 A fringe benegit on which fringe benefit tax was paid by
the employer is not income of the employee.
 A fringe benegit on which fringe benefit tax was not
paid by the employer is income of the employee on
the excess over the statutory maximu exclusion
from gross income.
FRINGE BENEFIT TAXES

FRINGE BENEFIT
◆ TYPES
1. Subject to the fringe Benefit Tax
 (given to the managerial or supervisory
employees)
2. Not SUbject to the Fringe Benefit Tax
 given to rank-and-file
3. De minimis benefits are not subject to fringe benefit
tax
FRINGE BENEFIT TAXES

FRINGE BENEFIT
◆ Rank-and-file
 the term rank-and-file means an employee who is
holding neither a managerial nor supervisory
position as defined under the existing provisions of
the Labor Code of the Philippines.
FRINGE BENEFIT TAXES

FRINGE BENEFIT
◆ SUBJECT TO FBT GIVEN TO MANAGERIAL OR
SUPERVISORY EMPLOYEES:
1. Housing
2. expense account
3. vehivle of any kind
4. housing personel
5. memBership fees, dues (borne by the employer)
FRINGE BENEFIT TAXES
FRINGE BENEFIT
◆ SUBJECT TO FBT GIVEN TO MANAGERIAL OR
SUPERVISORY EMPLOYEES:
6. Interest on loan at less than market rate
7. travel expenses (foreign and local)
8. hliday and vacation expenses
9. educational assistance to the employee or his
dependents
10. life insurance and other non-life insurance (in excess
of what the law allows)
FRINGE BENEFIT TAXES

FRINGE BENEFIT
◆ SUBJECT TO FBT GIVEN TO MANAGERIAL OR
SUPERVISORY EMPLOYEES:
 Not included as FB
1. benefit required by the nature of, or necessary to
the business or profssion of the employer;
2. benefit for the convenience or advantage of the
employer;
FRINGE BENEFIT TAXES

FRINGE BENEFIT
◆ SUBJECT TO FBT GIVEN TO MANAGERIAL OR
SUPERVISORY EMPLOYEES:
 Not included as FB
3. benefit which is authorized and exmpted from tax
under special law;
4. contribution by the employer for the benefit of the
employee to retirement, insrance and
hospitalization benefit plan
FRINGE BENEFIT TAXES

FRINGE BENEFIT
◆ FBT COMPUTATION:
1. Compute fro the grossed-up monetary value o the
benefit:
 MV / 65% = Grossed-up Monetary Value
2. Compute for the tax
 GMV x 35% = Fringe Benefit Tax (FBT)
FRINGE BENEFIT TAXES

FRINGE BENEFIT
◆ FBT COMPUTATION EXAMPLE:
◆ A car plan of his employer was availed by Mr. S, the
accountant. The cost of the plan was P340,000.
1. Compute fro the grossed-up monetary value o the
benefit:
 MV / 65% = P340,000/65% = 523,077
2. Compute for the tax
 523,077 x 35% = 183,077 (FBT)
FRINGE BENEFIT TAXES
FRINGE BENEFIT
◆ DE MINIMIS BENEFIT
 In general, shall be limited to facilities and privileges
furnished or offered by an employer to his
employees that are:
1. relatively small in value
2. as a means of prmoting health, foodwill,
contentment or efficiency of the employees.
3. any of those mentioned by BIR REvenue
Regulation
 THANK
YOU PO AND GOD
BLESS