Chapter 10 Flashcards

(76 cards)

1
Q

This refers to any person for whom an individual performs any service of whatever nature as employee of such person.

A

Employer

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2
Q

This refers to any individual who is a recipient of wages and includes officer, employee or elected official of the Government of the Philippines or any political subdivisions, agency or instrumentality thereof

A

Employee

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3
Q

Are officers of a company its employees?

A

Yes

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4
Q

What is the 4 fold test?

A

332

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5
Q

This is a screening process for employees to hire.

A

Selection and engagement of employees

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6
Q

This refers to the control of the employer on the payment of wages

A

Payment of wages

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7
Q

This is the power to retrench or terminate employees

A

Power of dismissal

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8
Q

This is the power to control the employee on the means and methods by which the work is accomplished

A

Power of control

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9
Q

What is the most important in the elements of a four fold test?

A

Power of control

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10
Q

Who are not employees?

A

Consultants, directors without management function, tv show artists

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11
Q

Those who are given powers or prerogatives to lay down and execute managerial policies and/or to hire, transfer, suspend, lay. off, recall, discharge, assign or discipline employees.

A

Managerial employees

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12
Q

Those who effectively recommend such managerial actions if the exercise of such authority is not merely routinary or clerical in nature but requires the use of independent judgment.

A

Supervisory employees

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13
Q

Those who hold neither managerial nor supervisory functions. the rest of those uno are not managerial, supervisory

A

Rank and file employees

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14
Q

Employees who are recipients of minimum wage.
They are exempt from income tax on their compensation.

A

Minimum wage earners

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15
Q

Employees who are subject to the regular progressive income tax. working for at least l yr per permanent employee

A

Regular employee

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16
Q

These are facilities or privileges such as entertainment, medical services, or courtesy discounts on purchases that are of relatively small value and are furnished by the employer merely as a means of promoting the health, goodwill, contentment, or efficiency of his employees.

A

De minimis benefits

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17
Q

memorize de minimus benefits table

A
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18
Q

What is the treatment for the excess de minimus over their regulatory l limits?

A

All are added to 13th month pay and other benefits

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19
Q

Is there a limit to the vacation leave and sick leave de minimus of government employees?

A

No

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20
Q

What is the treatment for terminal leave pay or commutation of unused leave credits due to involuntary separation?

A

It is treated as a de minimis benefits subject to a 10-day credit limit

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21
Q

Are employee benefits of non-Filipino nationals taxable on income?

A

No they are exempt

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22
Q

Are employee benefits of Filipino nationals employed by foreign government embassies taxable on income?

A

Yes

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23
Q

What are the exemptions to the taxability of employee benefits of Filipino nationals employed by foreign government embassies?

A

If the work under:
UN
AUSAID
FAO
WHO
etc

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24
Q

Is the exemption of Filipino employees under foreign government embassies automatic?

A

No. They have to file an application for confirmation of tax exemption with the BIR’s ITAD

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25
What is ITAD?
International Tax Affairs Division
26
Can a Filipino employee under foreign government embassies be exempt from income tax without a confirmation certificate from the BIR?
No
27
If the benefits or allowances given to an employee for the benefit or convenience of the employer, is it taxable or not?
Not taxable according to the necessity of the employer rule
28
How are benefits or allowances given to an employee for the benefit or convenience of the employer treated as?
Business expense
29
If the business expense of allowances given to an employee for the convenience of the employer is unreasonably excessive, how is then treated?
It is a hybrid expense. The portion representing the privilege to the employee is taxable.
30
This pertains to the fixed remunerations received by the employee every payroll period.
Regular compensation
31
This pertains tot he performance-based pays to employees with or without regard to the payroll period.
Supplemental compensation
32
This category of supplemental compensation is necessary to contain incentive pays and all other taxable employee benefits not classifiable as regular or supplemental compensation.
13th month pay and other benefits
33
What are the two examples of regular compensation?
Basic salary Fixed allowances
34
How are fixed allowances received by the employee treated as?
inclusion to regular compensation
35
Fixed allowances are generally taxable. What are the exceptions?
1. if for the employer's trade 2. expense is subject to accounting/liquidation 3. excess advances are returned
36
Are variable and liquidated allowances subject to tax?
No
37
How are fees treated as?
Professional income
38
How are commissions to non-employees (like sales agents) treated as?
Business income by the sales agent
39
How are tips and gratuities treated as?
Other income of the employee
40
How is termination pay wherein the reason for termination is beyond the employee's control treated as?
Addition to gross compensation income but deducted as non-taxable compensation.
41
What are the examples of supplementary compensation?
Overtime pay Hazard pay Holiday pay NSD Honoraria Commissions Emoluments Fees
42
How are overtime, holiday, hazard and ND pay treated as?
Additional compensation income except for MWE
43
Commissions vs Emoluments vs Honoraria
Commissions - incentives to stimulate sales Emoluments - any pay in general Honoraria - additional payments for attending to special tasks
44
How are living quarters or meals treated as?
Included to compensation income XPTN: the same was for the convenience or necessity of the employer or his business then it is exempt
45
This entitles employees to purchase shares of stocks of the employer at a pre-determined exercise price fixed on the grant date.
Equity-settled options
46
This entitles the employee to receive in cash the excess of the FV of stocks over the exercise price without actually delivering the stocks
Cash-settled options
47
What are the 2 types of options?
Equity-settled Cash-settled
48
This is a reward for churning the business to post a profit. It can be enjoyed by individual employees. It is a compensation for controlling all the factors that influence profit.
Profit sharing
49
How are bonuses treated?
Additional compensation XPTN: Linked to productivity under the productivity incentive plan of the employer then it is de minimis benefits
50
How is a productivity incentive linked to improvements in productivity treated as?
De minimis benefits
51
This is anchored on improvements in the factors of production and is usually enjoyed collectively by employees.
Productivity incentive
52
When is profit sharing payable?
Only when the business posts a profit
53
True or False: Productivity incentive is payable even if the business poses a loss.
True
54
What consists the 13th month pay of government employees?
Christmas bonus equivalent to one month salary plus a 5,000 cash gift
55
What consists the 13th month pay of private employees?
one month salary
56
How is Christmas bonus of private employees treated as?
Other benefits
57
How is Christmas bonus in the form of profit sharing be treated as?
Additional compensation income
58
How is Christmas gift of government employees treated as?
13th month pay and other benefits
59
Bonus vs Gift
Bonus - performance-based Gift - gratuitous
60
This includes all other taxable fringe benefits not specifically included in the compensation income as regular, supplementary or 13th month pay, and other benefits under current tax rules.
Other fringe benefits
61
How are employee personal expenses, even if receipted in the name of the employer, when assumed or paid by the employer treated as?
Fringe benefits
62
The excess over the 90,000 of 13th month pay and other benefits is treated as?
taxable subject to withholding tax on compensation
63
How is the 5,000 Christmas gift of government employees treated as?
inclusion to 13th month pay and other benefits
64
What is the salary of MWE?
5,000 a month or 60,000 per year whichever is higher
65
When will MWEs be required to pay income tax?
when their total taxable income exceeds 250,000 a year
66
Are MWEs still exempt even if they are earning other taxable items of compensations other than their current employer?
Yes
67
How is a MWE taxed if an employee only becomes a MWE during the year?
The income before becoming a MWE is taxable. Income as a MWE is exempt.
68
How is a MWE taxed if he ceases to be a MWE during the year?
The income after being a MWE is taxable.
69
What is COLA?
Cost-ofLiving Allowance
70
How is COLA of MWEs treated as?
part of the minimum wage
71
What is the role of the employer in a withholding tax on compensation method?
Withholding agent
72
This is a method of collecting the income tax at source upon receipt of the income.
Withholding tax on compensation
73
How is under-withholding treated as?
Deducted on the final payroll of the employee
74
How is over-withholding treated as?
refunded to employee
75
When is the deadline of filing and remittance of the withholding tax on compensation?
the 10th day of the following month the withholding was made
76
True or False: Fixed allowances are part of regular compensation even if a portion of the allowances are actually used in the employer's business.
True