Income-Taxation of of intermediate accounting 2 Bachelor of Science in Accountancy PDF

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Republic of the PhilippinesPOLYTECHNIC UNIVERSITY OF THE PHILIPPINESCOLLEGE OF ACCOUNTANCY & FINANCE Taxation 1: LML / VGL / GSJINSTRUCTIONAL MATERIALSforACCO 20133: INCOME TAXATION(Updated by RA 10963 -TRAIN Law)COMPILED BY:DEAN LILIAN M LITONJUAPROF. VIRGILIO G. LITONJUAPROF. GENO C. SAN J...

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Republic of the Philippines

POLYTECHNIC UNIVERSITY OF THE PHILIPPINES COLLEGE OF ACCOUNTANCY & FINANCE

Taxation 1: LML / VGL / GSJ

INSTRUCTIONAL MATERIALS for ACCO 20133: INCOME TAXATION (Updated by RA 10963 -TRAIN Law)

COMPILED BY:

DEAN LILIAN M LITONJUA PROF. VIRGILIO G. LITONJUA PROF. GENO C. SAN JOSE

NEVER GIVE UP COZ TIME PASSES ANYWAY

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INTRODUCTION: There are two types of taxes collected in the Philippines, namely local taxes and national taxes. Taxes imposed at the national level are called national tax which is collected by the Bureau of Internal Revenue (BIR), while those imposed at the local level (i.e., provincial, city, municipal, barangay) are called local taxes which is collected by a local treasurer's office. National taxes include Donor’s taxes, Estate tax, Value Added tax, Other Percentage Tax and Income taxes. These taxes are imposed by the National Government in accordance with the Tax Code of the Philippines or the NIRC (National Internal Revenue Code). Last January 1, 2018, amendments were made to our Tax code thru enactment of TRAIN Law. On this module, we will focus on income taxes levied and collected by the BIR to different taxpayers. In the Philippines, the Income Tax is a tax collected from Individuals / Corporations and is imposed on different sources of income like labour, pensions, interest and dividends. Revenues from the Income Tax are an important source of income for the government of Philippines. Also, Income tax is a type of tax that governments impose on income generated by businesses and individuals within their jurisdiction. Our Tax laws cannot be applied to other jurisdiction or countries. By law, taxpayers must file an income tax return. Citizens of the Philippines and resident aliens must pay taxes for all income they have derived from various sources, which include, but are not limited to: compensation income (e.g., salary and wages);income of self-employed individuals and/or professionals; capital gains; interests; rents; royalties; dividends; annuities; prizes and winnings; pensions; and, partner's share from the profits of partnership. Individuals, including nonresident aliens, earning compensation income are taxed based only on the income tax schedule for individuals. On the other hand, self-employed individuals and professionals are taxed based on the income tax schedule for individuals, applicable percentage tax rates. However, if their gross sales (or gross receipts plus other non-operating income) does not exceed the VAT threshold, they have the option to be taxed either on the basis of the income tax schedule for individuals and the applicable percentage taxes, or just with a flat tax rate of 8% on their gross sales (or gross receipts plus other nonoperating income. On this module, we will discuss the income taxation for Individuals and Corporations as defined by our Tax Code. Included on these modules are the amendments made in our Tax Code by TRAIN Law which became effective January 1, 2018.

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REPUBLIC OF THE PHILIPPINES POLYTECHNIC UNIVERSITY OF THE PHILIPPINES OFFICE OF THE VICE PRESIDENT FOR ACADEMIC AFFAIR COLLEGE OF ACCOUNTANCY AND FINANCE OBE COURSE SYLLABUS AND LEARNING PLAN COURSE TITLE: INCOME TAXATION COURSE CODE: ACCO 20133 COURSE CREDITS: THREE (3) UNITS COURSE PRE-REQUISITES: ACCO 20043 FINANCIAL ACCOUNTING AND REPORTING (PART 2) EFFECTIVITY: School year 2018-2019 onwards COURSE DESCRIPTION: This subject covers the knowledge of the concepts, principles, laws, rules and procedures associated with income taxation for individuals, partnerships and corporations. Understanding of the new tax laws, rules and provisions of the TRAIN ACT (Tax Reform for Acceleration and Inclusion) per RA No. 10963, known as the NIRC of 2017, effective in the year 2018 and thereafter This syllabus focuses on key tax topics, along with readings of cases studies, and primary source materials (Income Tax Textbook and Income Tax Practice Set) and providing time for departmental mid-term assessment /exam and departmental final assessment /exam. Students must be able to do the theoretical and practical applications of said concepts, principles, laws, rules and the procedures related to income taxation. This subject, likewise, is primarily concerned with the: general principle of taxation, tax remedies of the government and of the taxpayers. Bureau of Internal Revenue organizations, powers and functions, classifications of and taxation for various income taxpayers, and their compliance with the BIR rules and regulations on matters and procedures in filing income tax returns and payments of income taxes due. Institutional Learning Programs Outcomes Course Outcomes Outcomes 1. Creative and Critical Thinking 2. Effective Communication 3. Strong Service Orientation 4. Passion to Life-Long Learning

1. Resolve Business issues and problems with a global and strategic perspective, using knowledge and technical proficiency in the areas of income taxation. 2. Conduct Accountancy research through independent studies of relevant literature and appropriate use of principles, 3

Upon completion of the course, the students are expected to know the: 1. Income taxation provisions of the New NIRC of 2017 also known as the TRAIN ACT per RA 10963, effective in year 2018 and thereafter 2. Pertinent /relevant BIR revenue regulations, circulars, rulings and tax

5. Sense of Personal and Professional Ethics 6. Patriotic, Sense of Nationalism and Global Responsiveness 7. Community Engagement 8. Adeptness in the Responsible Use of Technology 9. High Level of Leadership and Organizational Skills

concepts of income taxation, accounting theory and methodologies. 3. Demonstrate working knowledge in the areas of financial accounting, reporting, cost accounting, management accounting, taxation, auditing, accounting information system and accounting research. 4. Demonstrate self-confidence in performing functions as a professional tax accountant. 5. Employ technology as a business tool in capturing financial and non-financial information, preparing reports and making decisions. 6. Apply acquired knowledge and skills to pass the CPA professional licensure exam and others. 7. Confidently maintain a commitment to good corporate, business, social and professional responsibility and ethical practice in performing functions as tax accountants. 8. Appraise ethical problems /issues in practical business, accounting and taxation situations and recommend appropriate course of actions that adheres to the personal and professional code of ethics.

advisory on income taxation in year 2018 onwards 3. Pertinent income taxation principles in the decisions of the Court of Tax Appeal and the Supreme Court 4. Preferential income taxation for tax exemptions provisions pertaining to business and industries. 5. Compliance requirements with the various income taxation measures, which includes: computations of income tax liabilities, accomplishing the income tax returns and forms, availment of income tax incentive benefits, submission of income tax regulatory and registration requirements and dealing with the various offices involved in income taxation 6. Effective communication matters and procedures pertaining to income taxation work to be handled 7. Knowledge and competencies of an entry-level accountant who can address the fundamental requirements of the various parties that he will be personally and professionally inter-acting in the future

DETAILED COURSE LEARNING PLAN: Weeks Meets, Hours

Topics

Learning Outcomes

Methodologies

Resources

Assessm ents

4

Week Meet No. 01, 3 hours

Orientation Day /Agenda 1.Introduction of the Subject, major topics, sub-topics and relevant matters 2. Objectives

Class

3. Obligations and Tasks of tax teacher and students

i. Knowledge and compliance with the rules and regulations of the PUP and the CAF. 2. Discuss and inculcate in students’ minds, their free – education benefits, objectives, obligations, attendance, attitude, behavior inside and outside the classroom, and other issues. 3. Outline the income taxation subject, major and subtopics, other relevant matters in learning-process.

1. take class attendance 2. see certificate of registration 3. give income tax syllabus 4. encourage students to read the student handbook 5. assigned for next meet, study, understand topics in chapters 1 and 2,

1. PUP CAF course income tax syllabus

After the students selfreading and self-understanding these tax topics at home and after the vital related teacher’s classroom lectures, discussions and illustrations, the students should be able to know and comprehend these tax topics: 1. Inherent powers of government 2. Limitations on the power of taxation, situs /place of taxation, 3. Principles of Sound Tax system 4. Nature, scope, classifications

1. take class attendance, and collect homework, 2. teacher class lectures, discuss, illustrations on tax topics, 3. conduct short exercises, recitations, questions and answers in Chapters 1, 2,

Textbook Phil. Laws on Income Tax 2019 Train Act by; Virgilio & Lilian Litonjua

2 PUP student handbook 3. PUP /CAF Memos

Observati ons, Question s and answers, Individual ly and class group,

4. Students Do’s and Dont’s

Week Meet No. 02, 3 hours

Topic /Chapter I. General Principles of Taxation BIR Organization, Power, Task 1. Principles of Taxation 2. Tax Remedies 3. BIR Powers, Functions, 4. BIR Commissioner Powers, Functions

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4 discuss answers to questions in chapters assigned

Reference s NIRC of 2017, Train Act, Per RA 10963 Income tax books by other author

quizzes, seat works recitation s questions & answers board works homewor ks, accompli shment of Practice Set on Income Tax 2019

essential characteristics of AND

Topic /Chapter 2 General Impositions of Individual Income Taxation 1.Changes to Individual Income Taxation by TRAIN ACT per RA 10963 in 2018 onwards 2. Administrative Provisions on Individual Income Taxation 3. Fundamental Concepts on Individual Income Taxation 4. Practical Provisions on Individual Income Taxation

taxes, 4. Enumerations, definitions, features, characteristics of taxes. 5.Tax evasion, vs tax avoidance, double taxation, 6. Legislation of tax laws, 7. Tax remedies of the government and taxpayers 8. Org. Powers, Functions, of BIR a. Primary Officials of the BIR b. Powers, Functions of the BIR c. Powers, Functions of the BIR Commissioner -----------------------------------1. Amendments by the Train Act to individual income taxation per RA 10963 2.Basic concepts on Individual Income Tax 3. Administrative provisions; Persons required to file income tax returns, Place and time to file income tax returns and pay income taxes, other taxpayers’ requirements 4. Fundamental concepts; Basic tax information on 6

5. assigned for next meet: answer theory question for submission, recitation, quiz, seatwork in classroom

BIR Revenue Act Regulations, Rulings, Circulars, Tax Advisory,

Study, understand topics in Chapter 3

Set on

Practice Phil. Income Tax 2019, Train Act. by Virgilio and Lilian Litonjua ,

per Train

Week Meet No. 03, 3 hours

Topic /Chapter 3 Taxable Income Individuals

for

1. Income Tax Laws /Rules For Ordinary Individuals 2. Income Tax Laws /Rules For Special Individuals 3. Income Tax Laws /Rules For Other Individual Income Taxpayers, 4. Income Tax Laws /Rules on Optional Income Taxation

various classificat enumerations, definitions of term items. 5. Practical provision; Interpret, discuss illustrate, formulas, tax rates, applications comply with the laws /rules and procedures on individual inc taxation After the students self1. take class reading attendance, and and self-understanding collect homework, these tax topics at home and after 2. teacher the vital related teacher’s class lectures, classroom lectures, discussions discuss, illustrations and illustrations, the students on tax topics, should be able to know and 3. conduct comprehend short exercises, these tax topics: recitations, 1. Income tax laws, rules questions and on Ordinary Individuals: answers in Chapters 3 RC, RA, NRC, NRAEBP, , EEI, SEI, SPI, MIE, 4 discuss 2. Income tax laws, rules answers to questions on Special Individuals: in chapters assigned NRANEBP, SAFE, 5. assigned for 3. Income tax laws, rules next meet: on Other Individuals; answer theory Minimum Wage Earner, question for Married Couple, submission, recitation, Parent and Child, quiz, seatwork Taxable Estate and Trust in classroom 4. Optional Income Taxation for NVRP, Self-employed individual 7

Textbook Phil. Laws on Income Tax 2019 Train Act by; Virgilio & Lilian Litonjua Reference s NIRC of 2017, Train Act, RA 10963 Income tax books by other authors BIR Revenue Regulations, Rulings, Circulars, tax advisory, Practice Set on

quizzes, seat works recitation s questions & answers board works home works, accompli shment of Practice Set on Income Tax 201 per Train Act

Week Meet No. 04, 3 hours

Topic /Chapter 4 Classifications of Tax Items for Individuals; 1. Classifications of Income, 2. Classifications of Expenses 3. Classifications of Income Tax

AND

Topic /Chapter 5 Income Credits for Individuals 1. income Tax Credits Quarterly, Annually

in NIRC Sec.116.

Study, understand topics in Chapters 4 and 5 ,

Phil. Income Tax 2019, Train Act. by Virgilio & Lilian Litonjua

After the students selfreading and self-understanding these tax topics at home and after the vital related teacher’s classroom lectures, discussions and illustrations, the students should be able to know and comprehend these tax topics: 1. Classifications of Income: Income Exempt from Income Tax Income subject to final tax Income subject to the basic tax 2. Classifications of Expenses Not Business Expense Non-deductible Business Expense Deductible Business Expense

1. take class attendance, and collect homework, 2. teacher class lecture, discuss, illustration on tax topics 3. conduct short exercises, recitations, questions and answers in Chapters 4, 5 4 discuss answers to questions in chapters assigned 5. assigned for next meet: answer theory question for submission, recitation, quiz, seatwork in classroom

Textbook Phil. Laws on Income Tax, 2019 Train Act by; Virgilio & Lilian Litonjua

Tax

3. Classifications of Income Taxes Income tax due before tax credit income tax credit Income tax due /payable after-tax credit _____________________ 1. income Tax Credits: withholding tax on wages 8

Reference s NIRC of 2017, Train Act, RA 10963 Income tax books by other author BIR Revenue Regulations, Rulings, Circulars, Tax Advisory, Practice Set on

Study, understand topics in Chapter 6

Phil. Income Tax 2019, Train Act. by Virgilio & Lilian Litonjua

quizzes, seat works recitation s questions & answers board works home works, accompli shment of Practice Set on Income Tax 2019 per Train Act

2. Income Tax Returns Variations of Formats /Formulas Quarterly, Annually

withholding tax at source excess income tax credit income tax in prior quarters, Income tax in original income tax return filed, income tax abroad, 2. Income Tax Credit for Resident Citizen 3. Income Tax Credit for. RA, NRC, NRAEB, 4. Income Tax Returns Various Formulas for Individuals RC, RA, NRC, NRAEB, EEI, SEI, SPI, MIE Quarterly, Annual Tax Returns.

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Week Meet No. 05, 3 hours

Topic /Chapter 6 Fringe Benefits for Individuals and Corporations 1. NonTaxable Fringe Benefits 2. Taxable Fringe Benefits 3. De-minimis Fringe Benefits 4. Fringe Benefit Tax 5. Related Deduction for Fringe Benefits

After the students selfreading and self-understanding these tax topics at home and after the vital related teachers classroom lectures, discussions and illustrations, the students should be able to know and comprehend these tax topics: 1. Components of NonTaxable Fringe Benefits 2. Components of Deminimis Benefits 3 Components of Unspecified Taxable fringe benefits 4. Specified Taxable Fringe Benefits: a. Housing Benefits b. Expense Account Benefits c. Vehicle Benefits d. Household Personnel Expense Benefits e. Interest on Loan Benefits f. Membership Fees, dues and other expenses benefits g. Holiday and Vacation Expenses Benefits h. Educational Assistance Benefits to the employee or his dependents

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1. take class attendance, and collect homework, 2. teacher class lectures, discuss, illustrations on tax topics 3. conduct short exercises, recitations, questions and answers in Chapters 6 4 discuss answers to questions in chapters assigned 5. assigned for next meet: answer theory question for submission, recitation, quiz, seatwork in classroom

Textbook Phil. Laws on Income Tax 2019, Train Act by; Virgilio and Lilian Litonjua

Study, understand topics in Chapter 7

Set on

Reference s NIRC of 2017, Train Act, Per RA 10963 Income tax books by other authors BIR Revenue Regulations, Rulings, Circulars, Tax Advisory, Practice Phil. Income Tax 2019, Train Act. by Virgilio & Lilian Litonjua

quizzes, seat works recitation s questions & answers board works home works, accompli shment of Practice Set on Income Tax 2019 per Train Act

i. Life, health, non-life insurance premiums benefits j. Foreign travel benefits 5. Other unspecified fringe benefits, 6. Related deductions for fringe benefits: if taxable benefits, if non-taxable benefits

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Week Meet No. 06 and No. 07 6 hours

Topic /Chapter 7 Gross Income for Individuals and Corporations 1. Exclusions of items from the taxable Gross Income, 2. Inclusions of items in the taxable Gross Income 3.Taxable Gross Income subject to regular income tax rates

After the students selfreading and self-understanding these tax topics at home and after the vital related teachers classroom lectures, discussions and illustrations, the students should be able to know and comprehend these tax topics: A. Exclusions from Gross Income; 1. Income Exempt from income taxes 2. Income Subject to Final Income Taxes 3. Not Income Items B. Inclusions in Gross Income; Income at Basic Income Tax; 1. Compensation for Services 2. Gross Profit from Trade, Business, Practice of Profession 3. Gains from Dealings in Assets 4. Interests Income 5. Rental income 6. Royalty Income 7. Dividend income 8. Annuity income 9. Prize, Winnings 10. Pensions and Retirement Benefits 12

1. take class attendance, and collect homework, 2. teacher class lecture, discuss, illustration on tax topics 3. conduct short exercises, recitations, questions and answers in Chapters 7 4 discuss answers to questions in chapters assigned 5. assigned for next meet: answer theory question for submission, recitation, quiz, seatwork in classroom Study, understand topics Chapter 8

Textbook Phil. Laws on Income Tax 2019 Train Act by; Virgilio & Lilian Litonjua Reference s NIRC of 2017, Train Act, Per RA 10963 Income tax books by other author BIR Revenue Regulations, Rulings, Circulars, Tax Advisory Practice Set on

in

Phil. Income Tax 2019, Train Act. by Virgilio & Lilian Litonjua ,

quizzes, seat works recitation s questions & answers board works home works, accompli shment of Practice Set on Income Tax 2019 per Train Act

11. Share in the Net income of Gen. Professional Partnership 12. Other Income, in general

Week Meet No. 08 and No. 09 6 hours

Topic /Chapter 8 Allowed Deduction for Individual...