ACEITAX - CHAPTER 2

graduated tax table

Regular income are subject to ______________

Capital gains tax (CGT)

SALE OF REAL PROPERTIES classifies as capital assets located in the Philippines is subject to what tax?

Deposit substitutes

- an alternative form of obtaining funds from the public other than deposits, through the issuance, endorsement, or acceptance of debt instruments for the borrower's own account, for the purpose of re-lending or purchasing of receivables and other obligations, or financing their own needs or the need of their agent or dealer.

Principal Residence

- is the family home of the individual taxpayer. - refers to the dwelling house, including the land on which it is situated, wherein an individual including his family resides as a permanent dwelling, or whenever absent, wherein the said individual intends to return

Nonresident alien

- means an individual whose residence is not in the Philippines and who is not a citizen thereof - they are the aliens who come to the Philippines for a definite purpose, which in its nature may be promptly accomplished

Final withholding tax

- not subject to graduated tax rates - kind of tax which is prescribed on "certain income" derived from the philippines sources and is not creditable against the income tax due of the payee on income subject to regular rates of tax for the taxable year

Self-employed and/or Professionals

- regular income amounting to > 250,000 in a taxable year - but not < 3,000,000 income vat threshold will have the option to avail 8% tax on gross sales/receipts - in excess of 250,000

Passive income

- subject to final withholding taxes - not subject to graduated tax rate or basic tax but to specific final withholding tax rates

Specific passive income

1. Interest income 2. Dividend income 3. Royalties 4. Prizes 5. Other winnings

Minimum Wage Earners are exempt from income tax on;

1. Minimum wage 2. Holiday pay 3. Overtime Pay 4. Night shift differential 5. Hazard pay

3 types of income

1. Ordinary or regular income 2. Passive income derived from the philippine sources 3. Capital gains subject to capital gains tax

b

A nonresident alien not engaged in trade or business is subject to what percentage of income tax based on gross income from all sources within the Philippines? a. 20% b. 25% c. 15% d. 10%

a

A nonresident citizen of the philippines was: a. All of the above b. Establishes to the satisfaction of the Commissioner of internal Revenue, the fact of his physical presence abroad with a definite intention to reside. c. Leaves the Philippines during the taxable year to reside abroad as an immigrant, for employment on a permanent basis or for work and derives income from abroad d. A citizen of the Philippines who shall have stayed outside the Philippines for 183 days or more by the end of the year

nonresident citizen

A person who arrives in the Philippines at any time during the taxable year to reside permanently in the Philippines shall be considered a _________________ for the taxable year in which he arrives in the Philippines with respect to income derived from sources abroad until the date of his arrival in the Philippines

d

All of the following are classified as resident alien except: a. who are actually present in the Philippines and who are not mere transients or sojourners b. who lives in the Philippines with no definite intention as to his stay c. who comes to the Philippines for the purpose that requires extended stay for its accomplishment d. None of the above

a

For NRA-NETB in the Philippines, interest income received from long-term deposit or investment shall be subjected to a Final withholding tax at the rate of ________ a. 25% b. 20% c. 30% d. 15%

Not engaged in trade or business

If an alien stays in the Philippines for only 180 days or less, or he is not deriving business income in the philippines, he is considered to as a nonresident alien _____________________

c

In determining the value of the shares, what method shall be used whereby all assets and liabilities are adjusted to market values a. Equity method b. Fair value method c. Adjusted Net Asset method d. None of the above

gross income

Individual taxpayers classified as nonresident aliens not engaged in trade or business (NRA-NETB) are taxable based on what income?

NRA-NETB

Passive income except for income subject to capital gains tax such as: - Interest - Cash and/or property dividends - Rents - salaries - wages - premiums -annuities - compensation - remuneration - emoluments - fixed or determinable annual/periodic/casual gains, profits and capital gains were considered as _____________

Within and Without

Sources of Taxable Income of Resident citizen

True

TRUE OR FALSE As a rule, sale of principal residence is subject to 6% CGT based on the selling price or fair market value, whichever is higher, except when the proceeds are fully utilized in acquiring or constructing new principal residence.

True

TRUE OR FALSE Certain regular income not subject to final taxes on passive income and capital gains tax are subject to "creditable" withholding taxes.

False

TRUE OR FALSE For income taxation purposes, OFWs are classified as a resident citizens

True

TRUE OR FALSE If the real property sold is classified as PRINCIPAL RESIDENCE, it may be exempted from CGT provided the requisites for exemption as provided under the Tax code are met

False

TRUE OR FALSE Income earned by an OCW/OFW that is earned out of the country is not exempted from Philipines income tax

True

TRUE OR FALSE Passive income is not considered as income derived from trade or business

True

TRUE OR FALSE SALE OF SHARES OF STOCK OF A DOMESTIC CORPORATION listed in the local stock exchange is not subject to income tax but to OPT as provided under Section 127 of the Tax code

True

TRUE OR FALSE Section 32(B)(7)(E) of the Tax code in relation to PD 851 as amended by RA10963 (TRAIN law) provides that 13th month pay and other benefits received by officials and employees of public and private entities are EXEMPT FROM INCOME TAX AND CWT on compensation, provided., however, that beginning Jan 1, 2018, the total exclusion shall not exceed 90,000 (82,000 prior to 2018)

True

TRUE OR FALSE The amount of tax withhel by the withholding agent (payor) is "constituted as a full and final payment" of the income tax due from the payee on the said income

True

TRUE OR FALSE Under section I, Article III of the Philippine Constitution, a Filipino citizen is natural person who is/has born (by birth) with father and/or mother as Filipino citizens

True

TRUE OR FALSE The long-term deposits or investments must have a maturity period of not less than 5 years.

True

TRUE OR FALSE Aliens who stayed in the Philippines for an aggregate period of more than 180 days during the taxable year and/or aliens who have business income in the Philippines are considered as nonresident aliens engages in trade or business

Net income

Tax base of resident citizen

c

The following are classified as deposit substitutes except a. Government debt and securities including Bureau of Treasury issued instruments and securities b. T-bonds, T-bills and Treasury notes c. Both a and b d. A only

e

The following are classified as individual taxpayers except: a. Resident Citizens (RC) b. Nonresident citizens (NRC) c. Resdient aliens (RA) d. Nonresident aliens (NRA ETB/NETB) e. None of the above

a.

The following are manner of filing or Income tax Returns (ITR) except: a. None of the above b. Manual Filing c. Electronic filing and payment system (EFPS) d. eBIR Forms

c

The following are taxpayer wherein their tax base was NET INCOME except: a. RC b. NRC c. NRA NETB d. RA and NRA-ETB

d

The following examples are capital gains subject to basic income tax except: a. Sale of shares of foreign corporations b. Sale of real properties located abroad c. Sale of other personal assets other than shares of stock of domestic corporations such as cars, jewelries and the like d. Sale of shares of stock of domestic corporation

fair market value

Under RR 6-2008 as amended by RR 6-2013, the value of the shares of stock at the time of sale shall be the ______________

c

Which statement/s is true? A filipino citizen is a natural person who is a. Born before January 17, 1973 of Filipino mother who elects philippine citizenship upon reaching the age of majority b. Born before June 17, 1973 of Filipino mother who elects philippine citizenship upon reaching the age of majority c. Both a and d d, Acquired Philippine citizenship after birth (naturalized) in accordance with Philippine Laws

Professional

a person formally certified by a professional body belonging to a specific profession by virtue of having completed a required course of studies and/or practice, whose competence can usually be measured against an established set of standards.

The income tax return shall be filed and paid with any of the following:

a. authorized agent banks b. revenue district officer c. collection agent d. duly authorized city or municipal treasurer

Applicable taxes for individuals depend on several factors such as but not limited to:

a. classification of the taxpayer b. source of income c. type of income

Gain on sale of ordinary asset

are commonly known as ordinary or regular income

Self-employed

as "a sole proprietor or an independent contractor who reports income earned from self-employment.

Resident alien

define by the Section 22 of the Tax code, as an individual whose residence is within the Philippines and who is not a citizen thereof.

Public

defined as borrowing from 20 or more individual or corporate lenders at any one time

Alien

is a foreign-born person who is not qualified to acquire Philippine citizenship by birth or after birth

Other percentage tax (OPT)

is not an income tax but a business tax

Creditable withholding tax

is not an internal revenue tax but a method of collecting income tax "in advance" from the recipient of income through the payor thereof, which is constituted by law as the withholding agent of government.

Individual taxpayers

natural persons with income derived from within the territorial jurisdiction of a taxing authority

Long-term deposit or investment certificate

refers to certificate of time deposit or investment in the form of savings, common or individual trust funds, deposit substitutes, investment management accounts and other investments with a maturity period of not less than 5 years, shall be prescirbed by BSP and issued by BANKS ONLY TO INDIVIDUALS in denominations of 10,000.

Ordinary or regular income

refers to income such as compensation income, business income, income from practice of profession, income for sale and/or dealings or property and miscellaneous income and passive income other than those subject to final taxes and capital gains tax.

Statutory minimum wage earner or minimum wage earner

shall refer to a worker in the private sector paid the statutory minimum wage, or to an employee in the public sector with compensation income of not more than the statutory minimum wage in the non-agricultural sector where he/she is assigned