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TAXTAXABLE INCOMETaxable or non-taxable Income from jueteng is taxable. The law imposes a tax on income from any source whatever which means that it includes income whether legal or illegal ( sec. 32 A, NIRC) Gain arising from expropriation of property is taxable. There is material gain, not exclude...

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TAX

TAXABLE INCOME Taxable or non-taxable Income from jueteng is taxable. The law imposes a tax on income from any source whatever which means that it includes income whether legal or illegal ( sec. 32 A, NIRC) Gain arising from expropriation of property is taxable. There is material gain,

The proceeds of life insurance received by a child as irrevocable beneficiary are not to be reported in the annual income tax returns, because they are excluded from gross income. This kind of receipt does not fall within the definition of income -- “ any wealth which flows into the taxpayer other than a mere return of capital.” Since insurance is compensatory in nature, the receipt is merely considered as a return of capital. (sec. 32 B (1), NIRC. 13th month pay is excluded from the gross income for income tax purposes to the extent of P 30,000. Any excess will be included in the gross income per income tax return as part of gross compensation income. ( Sec. 32 B (7e), NIRC.

De minimis benefits are non-taxable fringe benefits. They are not to be reported in the income tax return because they are tax exempt. They are also exempt from the imposition of the fringe benefits tax. ( Sec. 33 (c ), NIRC) Dividends received by a domestic corporation from another domestic corporation are not subject to income tax, hence should not be declared in the income tax return. (Sec. 27 D4), NIRC. Dividends received by a domestic corporation from a foreign corporation is subject to income tax and shall form part of the gross income. There is no law exempting this type of dividend from income tax. ( Sec. 32 (7), NIRC. Interest on deposit with BPI Family Bank is a passive income subject to a final

Pension received from GSIS is exempt from income tax, but not on the interest income that might accrue on the pensions deposited with the bank, which are subject to final withholding tax. Consequently, the pensioner’s pension which accrues interest is already subject to the final withholding tax, he is not required anymore to file an income tax return. ( sec. 51 A2)

Taxable income taxable income means the pertinent items of gross income specified in the Tax Code, less the deductions and/or personal and additional exemptions, if any,

authorized for such types of income by the Tax Code or other special laws. (sec. 31, NIRC 1997)

Prizes If the Prizes and awards is in excess of P10,000, it is not includable in the gross income but is subject to a final tax of 20%. The Prize constitutes a taxable income because there was an action on his part to enter the contest. Otherwise it is tax exempt. Problem: is the prize of one million pesos awarded by Reader’s Digest subject to

Income tax on retirement An employee retiring under a company’s qualified and private retirement plan can only be exempt from income tax on his retirement benefits if the following requisites are met. ( RA 4917) – meaning, retirement plan approved by BIR. 1. The retiring employee must have been in service of the same employer for at least 10 years 2. That he is not less than 50 years of age at the time of retirement 3. The benefit is availed of only once.

Under a company without any retirement plan ( RA 7641) 1. Those relieved under existing collective bargaining agreement and other agreements are exempt 2. In the absence of retirement plan or agreement providing for retirement benefits, the benefits are excluded from gross income and exempt from income tax if: o

The retiring employee must have served at least 5 years

should not also be subject to WT. The employees were laid off, hence separated for a cause beyond their control. Consequently, the amounts to be paid by reason of such involuntary separation are excluded from gross income, irrespective of whether the employee at the time of separation has rendered less than ten years of service and/or is below fifty years of age....