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    Inclusions in Gross Income: BAM 127: Income Taxation For BA Module #14

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    Mylene Santiago
    The document lists 11 items that are included in gross income for taxation purposes: 1) compensation, 2) business or professional income, 3) gains from property dealings, 4) interest, 5) rents, 6) royalties, 7) dividends, 8) annuities, 9) prizes and winnings, 10) pensions, and 11) a partner's share of general professional partnership income. It provides notes and exceptions for some of these items.

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    Inclusions in Gross Income: BAM 127: Income Taxation For BA Module #14

    Uploaded by

    Mylene Santiago
    838 views18 pages
    The document lists 11 items that are included in gross income for taxation purposes: 1) compensation, 2) business or professional income, 3) gains from property dealings, 4) interest, 5) rents, 6) royalties, 7) dividends, 8) annuities, 9) prizes and winnings, 10) pensions, and 11) a partner's share of general professional partnership income. It provides notes and exceptions for some of these items.

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    Module-14-Inclusions-in-Gross-Income

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    The document lists 11 items that are included in gross income for taxation purposes: 1) compensation, 2) business or professional income, 3) gains from property dealings, 4) interest, 5) rents, 6) royalties, 7) dividends, 8) annuities, 9) prizes and winnings, 10) pensions, and 11) a partner's share of general professional partnership income. It provides notes and exceptions for some of these items.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    838 views18 pages

    Inclusions in Gross Income: BAM 127: Income Taxation For BA Module #14

    Uploaded by

    Mylene Santiago
    The document lists 11 items that are included in gross income for taxation purposes: 1) compensation, 2) business or professional income, 3) gains from property dealings, 4) interest, 5) rents, 6) royalties, 7) dividends, 8) annuities, 9) prizes and winnings, 10) pensions, and 11) a partner's share of general professional partnership income. It provides notes and exceptions for some of these items.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 18

    Inclusions in

    Gross Income
    BAM 127: Income Taxation for BA
    Module #14
    Inclusions in Gross
    Income
    INCLUSION IN GROSS INCOME
    1. Compensation; 7. Dividends
    2. Gross Income from 8. Annuities;
    business or profession; 9. Prizes and
    3. Gains from dealings Winnings;
    in properties; 10. Pension; and
    4. Interest; 11. Partner’s
    5. Rents; distributive share in GPP.
    6. Royalties;
    Inclusions in Gross
    Income
    1. Compensation – income that arises from EE-
    ER relationship.
    Inclusions in Gross
    Income
    Note:
    (1) Necessity and Convenience of the Employer -
    benefits or allowances (aka facilities) furnished to
    the employees to enable them to appropriately and
    effectively execute their duties are exempt from
    income tax.
    (2) Compensation in kind is taxable at the fair value
    of the consideration received.
    (3) Authorized Causes – beyond the control of the
    employee. Eg. Retrenchment, bankruptcy,
    redundancy, etc.
    Inclusions in Gross
    Income
    De Minimis Benefits
    Inclusions in Gross
    Income
    Note:
    (1) The 10 day rule applies only to vacation
    leaves. Monetization of sick leaves is taxable;
    and
    (2) Vacation and sick leave of government
    employees are not subject to the 10 day limit
    rule.
    (3) Christmas gift of government employees is
    designated by the NIRC to be part of 13th
    month pay and Other Benefits.
    Inclusions in Gross
    Income
    2. Gross Income from Business or Profession
    General Rule: Income from the conduct of
    trade, business or exercise of a profession are
    subject to regular income tax.
    Exceptions:
    1. Those exempt from income tax
    1.1 Barangay Micro Business Enterprises
    (BMBE) under RA 9178; and
    1.2 Enterprises enjoying tax holidays – EO 226
    Inclusions in Gross
    Income
    2. Gross Income from Business or Profession
    Exceptions:
    2. Those Subject to Special Tax Regime
    2.1 PEZA or TIEZA registered – 5%
    2.2 Self employed or Professionals using 8% Optional
    Income Tax
    3. Those subject to Final Income Tax
    3.1 Subcontractor of Petroleum Service Contractor –
    8% final tax
    3.2 Business income of FCDU & OBU from Philippine
    residents – 10% final tax
    Inclusions in Gross
    Income
    3. Gains from Dealings in Properties –
    All gains or losses from the sale, exchange
    or disposition of (1) ordinary asset; (2)
    movable properties classified as capital
    asset; and (3) stocks of Foreign
    Corporation are subject to regular income
    tax.
    Inclusions in Gross
    Income
    Rules on Sale or Exchange of Personal
    Property (Capital Asset)
    a. Capital Losses are deductible only from
    capital gains;
    b. Corporations has no holding period
    thus no carry over;
    Inclusions in Gross
    Income
    Rules on Sale or Exchange of Personal
    Property (Capital Asset)
    c. Holding Period:
    Short Term (within 12 months) – 100%
    Long Term (beyond 12 months) – 50%
    d. Carry Over – limited only to the net
    income during the year.
    Inclusions in Gross
    Income
    4. Interest Income – Interest income that
    are not subject to final tax.
    (1) Interest earned by banks and lending
    companies.
    (2) Interest earned from bank deposits
    abroad.
    (3) Interest income from bonds and
    promissory notes.
    Inclusions in Gross
    Income
    5. Rental Income – income arises from
    leasing properties.
    Note: Rental income shall include non-
    refundable deposits and/or advances that
    will be applied to future rental
    payments. It is taxable upon receipt of
    the latter.
    Inclusions in Gross
    Income
    6. Royalties
    a. Within the Philippines – Final Tax
    b. Without the Philippines – Regular
    Income Tax
    Inclusions in Gross
    Income
    7. Dividends – Cash and property
    dividends declared

    Note: Stock & Liquidating dividends are


    not taxable
    Inclusions in Gross
    Income
    8. Annuities – The excess of annuity payments
    received by the recipient over the premium
    paid is taxable income in the year of receipt.
    9. Prizes and Winnings – those prizes or
    winnings which are neither subject to final tax
    nor exempt.
    a.) Prizes not exceeding P10,000
    b.) Prizes and winnings earned outside the
    Philippines
    Inclusions in Gross
    Income
    10. Pensions – Pension or retirement benefits
    failed to meet all the criteria below.
    a. The employer must maintain a private
    pension plan approved by the BIR;
    b. At least 10 years in service in the same
    employer;
    c. Must not be less than 50 years old upon
    retirement; and
    d. Must be availed only once.
    Inclusions in Gross
    Income
    11. Partner’s distributive share in GPP – GPPs are
    exempt from income tax but its partners are liable to
    pay taxes individually.
    12. Other Sources
    a. Income distribution from taxable estates and trust;
    b. Farming Income;
    c. Recovery of Accounts Receivable Written Off;
    d. Cancellation of debt for a consideration; and
    e. Share from the net income of joint venture or co-
    ownership.

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