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    Mike has various sources of income from the Philippines and Canada as a resident citizen and non-resident alien. As a resident citizen, his total taxable income is PHP 2.77 million and his tax due is PHP 738,000. As a non-resident alien engaged in business, his taxable income is PHP 1.85 million and tax due is PHP 445,000. As a non-resident alien not engaged in business, all of his gross income of PHP 3.85 million is taxable and his tax due is PHP 962,500. The document also provides details on tax rates and calculations for various income types for resident citizens and non-residents.

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    Mike has various sources of income from the Philippines and Canada as a resident citizen and non-resident alien. As a resident citizen, his total taxable income is PHP 2.77 million and his tax due is PHP 738,000. As a non-resident alien engaged in business, his taxable income is PHP 1.85 million and tax due is PHP 445,000. As a non-resident alien not engaged in business, all of his gross income of PHP 3.85 million is taxable and his tax due is PHP 962,500. The document also provides details on tax rates and calculations for various income types for resident citizens and non-residents.

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    Mike has various sources of income from the Philippines and Canada as a resident citizen and non-resident alien. As a resident citizen, his total taxable income is PHP 2.77 million and his tax due is PHP 738,000. As a non-resident alien engaged in business, his taxable income is PHP 1.85 million and tax due is PHP 445,000. As a non-resident alien not engaged in business, all of his gross income of PHP 3.85 million is taxable and his tax due is PHP 962,500. The document also provides details on tax rates and calculations for various income types for resident citizens and non-residents.

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    Download as docx, pdf, or txt
    36 views3 pages

    Coursehero

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    number one
    Mike has various sources of income from the Philippines and Canada as a resident citizen and non-resident alien. As a resident citizen, his total taxable income is PHP 2.77 million and his tax due is PHP 738,000. As a non-resident alien engaged in business, his taxable income is PHP 1.85 million and tax due is PHP 445,000. As a non-resident alien not engaged in business, all of his gross income of PHP 3.85 million is taxable and his tax due is PHP 962,500. The document also provides details on tax rates and calculations for various income types for resident citizens and non-residents.

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    of 3

    Problem 1

    1) Taxable income of Mike if resident citizen


    Gross Income PH                    3,850,000
    Less: Business expenses PH    2,000,000
    Taxable income                       1,850,000
     
    Gross income, Canada          1,650,000
    Business expense, Canada       725,000
    Taxable Income                         925,000
     
    Total Taxable Income            2,775,000
     
    2) taxable income if Mike is non resident citizen                      1,850,000
     
    3) taxable income of Mike if non-resident alien not engaged in trade or business    
    The taxable income is the gross income                                 3,850,000
     
    4) Tax due of Mike if resident citizen
    Taxable income bracket 2,000,001 to 8,000,000  
    tax due is 490,000 plus 32% of the excess over 2,000,000
    775,000 x 32% = 248,000 + 490,000
    tax due is 738,000
     
    5) tax due of Mike if non-resident alien engaged in trade or business 
    Taxable income bracket 800,001 to 2,000,000
    tax due is 130,000 plus 30% of the excess over 800,000
    1,050,000x 30% = 315,000 + 130,000
    tax due is 445,000
     
    6. tax due of Mike if non-resident alien not engaged in trade or business
    tax due is gross income x 25% flat rate
    3,850,000 x 25% = 962,500
     
    Problem 2 
    1. Final tax for resident citizen
    subject to 20%
    Interest, peso deposit       100,000
    Prize in local lottery             50,000
    PCSO winnings                2,000,000
    Prize contest U.S.               300,000
    Lotto winning U.S.                100,000
    total 2,550,000 x 20% = 510,000
    subject to 15%
    Interest, $deposit BDO     420,000
    Interest, deposit in HK          50,000
    total 470,000 x 15% = 70,500
    subject to 10%
    Dividend, domestic corp  600,000 x 10% = 60,000
    Final tax 510,000 + 70,500 + 60,000 = 640,500
    2. final tax non resident citizen
    subject to 20%
    Interest, peso deposit       100,000
    Prize in local lottery              50,000
    PCSO winnings                2,000,000
    2,150,000 x 20% = 430,000.
    Dividend, domestic corp  600,000 x 10% = 60,000
    Final tax 430,000 + 60,000 = 490,000
    3. final tax non resident alien engaged in trade or business
    subject to 20%
    Interest, peso deposit       100,000
    Prize in local lottery              50,000
    PCSO winnings                 2,000,000
    Dividend, domestic corp     600,000
    2,750,000 x 20% = 550,000
    4. final tax non resident alien not engaged in trade or business
    subject to 25%
    Interest, peso deposit       100,000
    Prize in local lottery              50,000
    PCSO winnings                 2,000,000
    Dividend, domestic corp     600,000
    2,750,000 x 25% = 687,500
    5. final tax non resident alien engaged in trade or business
    subject to 20%
    Interest, peso deposit       100,000
    Prize in local lottery              50,000
    PCSO winnings                 2,000,000
    Dividend, domestic corp     600,000
    2,750,000 x 20% = 550,000
     
    Problem 3
    1. 140,000 - 80,000 = 60,000 x 15% 
    capital gains tax 9,000
    2. 0, included in exempt from capital gains tax, dealer in securities, regularly engaged in the
    buying or selling of securities
    3. 9,000
    4. 0, loss on sale
     
    Part 2
    1. based on financial statements ending december 31. 2020
    because the corporations accounting period is calendar basis
    2. Capital gains tax on sale of real property under the TRAIN law is subject to 6% of the
    gross selling price or current fair market value, whichever is higher and documentary stamp
    tax of 1.5% of the actual consideration of the sale.
    3. capital gains tax is computed on current fair value
    15,000,000 x 6% = 900,000 CGT
    4. the sale is subject to 450,000 CGT for the 1/2 not used to buy new principal residence.
     
    requisites for principal residence
    1) funds from sale of principal residence must be fully applied to acquisition or construction
    of new principal residence within a period of 18 calendar months of its sale
    2) the BIR commisioner must be informed of the seller's desire to avail such exemption withi
    30 days of the sale, through prescribed return
    3) such exemption may benefit the seller only once every 10 years
    4) any proceeds from sale that have not been utilized shall be subject to 6% CGT.
    5) the buyer of such principal residence shall withhold from the seller the 6% CGT the latter
    would have ordinarily paid.
    5. yes
    6. yes . the  8%  is for purely self employed individuals and/or professionals whose gross
    receipts  and other operating income do not exceed  3,000,000
    7. taxable on excess benefits only
     
    problem 4
    1. Pet shop
    Gross sales                   1,800,000   
    less cost of sales           600,000
    operating expenses      200,000
    taxable income            1,000,000
    interior design services
    gross sales                  1,150,000
    lesscost of sales            120,000
    operating expenses         80,000
    taxable income           950,000
    total taxable income 1,950,000
    tax bracket over 800,000 but not over 2,000,000 - 130,000 plus 30% of excess over
    800,000
    1,150,000 x 30% = 345,000 + 130,000
    tax liability is 475,000
    2. Gross sales pet shop  1,800,000
    Gross sales interior design 1,150,000
    less                                          250,000
    taxable income 2,700,000 x 8% = 216,000
    taxliability is 216,000
    3. If VAT registered, it is not allowed for the 8% income tax based on gross receipts. Income
    tax is based on graduated income tax rates similar to no. 1

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