Lists, Requisites, Requirements Flashcards
Which taxpayers are not allowed to use NOLCO? (4)
- Those who are tax-exempt
- Those under income tax holidays
- Those taxed on gross income
- Those whose sole income is subject to final income tax
Who are not allowed to use the OSD? (5)
- NRAET
- NRANET
- Those mandated to use itemized deductions
- Those subject to preferential rates
- NIRC-exempt individuals with no other taxable income
Who are mandated to use itemized deductions?
- Tax-exempt individuals and corporations
- Those subject to special and preferential tax rates
- Those subj to mixed tax regimes
What deductions are allowed to NRA?
- Prorated CLUT
- TPU
- Vanishing deduction
- Standard deduction of P500,000
Requisites to be exempt from CGT on sale of real property classified as capital asset, on the grounds of acquiring a new principal place of residence (8)
- Seller must be a citizen/resident alien
- The property sold is his principal residence
- The proceeds are used to acquire a NEW principal residence
- The BIR is duly notified of intention to avail exemption within 30 days of sale (thru fomr 1706 & Sword Declaration of Intent)
- Reacquisition is made within 18 months from date of sale
- The capital gain is held in escrow for the government
- Exemption is availed of once in every 10 years
- The historical cost or adjusted basis of the residence sold shall be carried over to the new residence
Which transactions are exempt from CGT on sale of real property?
- Sale of raw lands to be used for socialized housing projects
- Land transfers under the comprehensive agrarian reform law of 1998
- Sale of principal residence to acquire a new principal residence
Exclusions from gross income
MRTGIRL:
MISCELLANEOUS: FGOCC income in PH, GPS income, P&A,CiLitArt,ReliCharEdSci, P&ASports, Contribs to SSS, PHIC, Pag-ibig, Union Dues, 13thMOPOB, Gains from sale of bonds, debentures, other cert of indebtedness > 5yrs maturity period; gains from redemption of shares from mutual fund company by an investor, MWE,BMBE income, Coop’s income*,NonstockNPEincome, Qualified employee trust funds income
RETIREMENT BENEFITS
TREATY-EXEMPT INCOME
GIFTS,BEQUESTS,DEVISES,DESCENT
INJURY/SICKNESS COMPENSATION
RETURN OF PREMIUM - INSURANCE (outliving policy)
LIFE INSURANCE POLICY PROCEEDS (insurable event)
Other exempt income
BMBE income Coop income Nonstock nonprofit entity income Qualified employee trust fund's income Minimum wage
Qualifications to avail of the 8% income tax rate on gross sales and receipts plus Other Non-Operating Income *less 250k
- Not a partner of a GPP
- GSR do not exceed P3,000,000
- Not subject to specific percentage tax
- Not vat-registered
How do you compute OSD?
40% on Gross OPERATING INCOME for both individuals and corporations.
never include capital dealings or non operating income such as: gain from sale of securities, loss from sale of foreign stocks
What is included in 13th MOPOB?
- Additional Compensation Allowance
- Midyear bonus
- Personal expenses paid by employer
- 13thMOP - 1mo salary + P5,000 cash gift, for government employees. (pag private, any christmas gifts are considered de minimis benefit subject to the P5,000 ceiling)
- Other benefits:
- Christmas bonus of both private and government employees
- Christmas gift of GOVERNMENT employees only
- Other fringe benefits of r&f employees
Are fixed allowances taxable as regular compensation income, fringe benefit, or Other Benefit?
TAXABLE as regular compensation.
Allowances subject to liquidation or reimbursement are not part of compensation.
Allowances necessary to the employer’s trade are also not part of compensation.
Is RATA part of gross compensation income?
If government employee: RATA under PERA Act is TAX-EXEMPT.
If private employee: Generally TAXABLE. If excess is returned, then it will be considered employer’s expense and not part of compensation income.
Required attachments to the ITR for self-employed taxpayers
1) 2307 Cert. of Creditable Tax Withheld at Source
2) SAWT
3) Financial statements IF CLAIMING ITEMIZED DEDUCTIONS
4) If GSR+ONOI>P3M: Audited Financial Statements (schedule of income-producing properties, comparative p&l, and p&l & bal sheet cert. by CPA)
Required attachments to the corporate ITR
1) 2307 Cert. of Creditable Tax Withheld at Source
2) SAWT
3) Financial statements IF CLAIMING ITEMIZED DEDUCTIONS
4) Audited Financial Statements (schedule of income-producing properties, comparative p&l, and p&l & bal sheet cert. by CPA)
Required attachments to the ITR of pure compensation earners
2316 Certificate of tax withheld from compensation
For RBE’s availing incentives by the IPA, the deadline for filing the Annual Tax Incentives report is
Within 30 days from the deadline of filing the final adjustment return
Who are not required to file an ITR? (4)
1) COMPENSATION income <= P250,000 under the graduated rates (If self-employed or in business, they are required to file a return regardless of the amount of gross income)
2) An individual receiving purely compensation income, regardless of amount, from only one employer in the Philippines for the calendar year, the income tax of which has been withheld correctly by the employer. (substituted filing)
3) An individual whose sole income has not been subjected to final withholding tax pursuant to Sec 57 (A) of the Tax Code.
4) Minimum wage earner
Imposition of the 25% surcharge (4)
1) Failure to pay the full / part of the amount of tax shown on any return
2) Failure to pay the deficiency tax within the time prescribed in the notice of assessment
3) Wrong venue filing
4) Late filing
Grounds for compromise
1) Reasonable doubt - 40%
2) Financial incapacity to pay - 10%
Suspension of the running of the statute of limitations (5)
1) For the period during which the Commissioner is prohibited from making the assessment, or beginning distraint/levy/proceeding in court and for 60 days thereafter
2) When the taxpayer requests for reinvestigation
3) When taxpayer cannot be located in given address
4) When no property could be located when a warrant of distraint/levy is served upon the taxpayer
5) When the taxpayer is out of the country
Cases of reasonable doubt
1) Jeopardy assessment
2) Assessment lacks factual / legal basis
3) Taxpayer failed to file an administrative protest
4) The demand notice failed to comply with formalities
5) Best evidence can be disputed
6) Execution of the waiver of statute of limitations
7) A competent court made an adverse decision vs the BIR
Cases which can’t be compromised
1) Withholding tax cases in general
2) Criminal tax fraud cases confirmed with CIR
3) Criminal violations already filed in court
4) Delinquent accounts with duly approved schedule of installment payment
5) Agreement form has been signed; cases where final reports of reinvestigation/reconsideration resulted to a reduction in the original assessment.
6) Cases which have become final and executory
Grounds for abatement
1) Tax is unjustly / excessively assessed
- late because of substantial losses from prolonged labor dispute, force majeure, wrong venue
2) Costs involved do not justify collection
