Tax Reviewer for Midterms
TAXATION LAW REVIEW: Midterms EXLUSIONS FROM GI (GIRL CRM ) 1.
CRITERIA FOR TAXABILITY OF INCOME
CITIZENSHIP/ NATIONALITY PRINCIPLE- A citizen of PH is subject to income tax on all sources within and outside. A resident alien only on his PH source income within. RESIDENCE/ DOMICILE PRINCIPLE- A resident alien is subject to income tax on all sources within. SOURCE PRINCIPLE- An alien is subject to PH to income tax from source within.
*IMPORTANT TO KNOW since PH has adopted semi-global tax system. 2.
TAXABLE AND NON-TAXABLE INCOME
TAXABLE INCOME= GI- DEDUCTIONS AND EXEMPTIONS DIFFERENT TYPES OF INCOME TAX Personal Income Tax on individuals- graudated rates Regular Corporate on corporations- 30% MCIT- 2% CAPITAL GAINS TAX ON SHARES OF STOCK ON DOMESTIC CORPORATION PASSIVE INVESTMENT INCOME (such as dividend,interest, royalties) FRINGE BENEFITS BPRT IAET FWT
Gifts, Bequests, Devises Income exempt under treaty Return of Premium Life Insurance Compensation for injuries/ sickness Retirement Benefits Misc. Items
DEDUCTIONS FROM GI (BELT DOCI)
Business Expenses Loses Taxes Depreciation OSD Charitable Contributions Interest
FILING OF CORPORATE RETURNS
GROSS INCOME (GRIP CARD GPP ) Gains from sale of RP Rents Interests Pensions Compensation Annuities Royalties Gross income from T or B Pensions Partner’s distributive share
File 4 returns during taxable period 1st three, on or before 15 th day after closing of each quarter 4th final adjusted, on or before 15 th day of ensuring year
Available to citizens or RA Optional UNLESS TP signifies intention to elect OSD Irrevocable for the year made 40% gross receipts or gross sales IF individual; 40% GI IF corporation Proof of actual expenses NOT required DEFINITION OF TERMS (SEC. 22)
Statutory minimum wage earner- shall refer to worker in the PRIVATE sector paid the SMW or to an employee in PUBLIC sector which compensation income of not more than the SMW in the non-agricultural sector where
assigned. Statutory minimum wage earner shall refer to rate fixed by the Regional Triparte Wage and Productivity Board CY- accounting period of 12 months ending on the last day of any month FY- accounting period of 12 months ending on the last day of any month other than December. *used by CORPORATIONS only
NRA is deemed is to be engaged in trade or business if NRA stays in an aggregate amount period of more than 180 calendar days or 6 months. NRANETB subjected to 25% and not allowed to the exemptions IAET. Imporperly Accumulated Earnings Tax. (SEC. 29) When corporations do not declare dividends are beyond the reasonable needs of the company. An IAET of 10% as a penalty tax is imposed to compel corporations to distribute earnings so that SH could in turn be taxed EXCEPT: Bank, non-bank, financial institutions are authorized by the Central Bank of PH to hold SOS of banks or insurance companies, GPPs. ACCESS POWERS OF CIR (SEC. 6 & 7)
Section 7. Authority of the Commissioner to Delegate Power . - The Commissioner may delegate the powers vested in him under the pertinent provisions of this Code to any or such subordinate officials with the rank equivalent to a division chief or higher, subject to such limitations and restrictions as may be imposed under rules and regulations to be promulgated by the Secretary of finance, upon recommendation of the Commissioner: Provided, However, That the following powers of the Commissioner shall not be delegated: (a) The power to recommend the promulgation of rules and regulations by the Secretary of Finance; (b) The power to issue rulings of first impression or to reverse, revoke or modify any existing ruling of the Bureau; (c) The power to compromise or abate, under Sec. 204 (A) and (B) of this Code, any tax liability: Provided, however, That assessments issued by the regional o ffices involving basic deficiency taxes of F ive hundred thousand pesos (P500,000) or less, and minor criminal violations, as may be determined by rules and regulations to be promulgated by the Secretary of finance, upon recommendation of the Commissioner, discovered by regional and district officials, may be compromised by a regional evaluation board which shall be composed of the Regional Director as Chairman, the Assistant Regional Director, the heads of the Legal, Assessment and Collection Divisions and the Revenue District Officer having jurisdiction over the taxpayer, as members; and (d) The power to assign or reassign internal revenue officers to establishments where articles subject to
ALL EVENTS TEST- Isabela Cultural
This test requires: (1) fixing of a right to income or liability to pay; and (2) the availability of the reasonable accurate determination of such income or liability. The all-events test requires the right to income or liability be fixed, and the amount of such income or liability be determined with reasonable accuracy. However, the test does not demand that the amount of income or liability be known absolutely, only that a taxpayer has at his disposal the information necessary to compute the amount with reasonable accuracy. The all-events test is satisfied where computation remains uncertain, if its basis is unchangeable; the test is satisfied where a computation may be unknown, but is not as much as unknowable, within the taxable year. The amount of liability does not have to be determined exactly; it must be d etermined with "reasonable accuracy." Accordingly, the term "reasonable accuracy" implies something less than an exact or completely accurate amount.