Income taxation gross income Prepared by ERMHAN R.MANIEGO...

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Unformatted text preview: Income taxation: gross income Prepared by: ERMHAN R.MANIEGO, CPA SCOPE OF DISCUSSION 1. What is Gross Income? 2. What are the items included in Gross Income? 3. What are the items excluded in Gross Income? what IS GROSS INCOME? Under Section 32 (A) of the National Internal Revenue Code (NIRC), Gross Income means all income derived from WHATEVER SOURCE. Refers to the amount of money or its equivalent, representing gains or profit that flows into the taxpayer from whatever sources other than those representing return of capital. Classification of INCOME INCOME TAXABLE (Inclusion) NON-TAXABLE (Exclusion) Requisites for Income to be Taxable 1. There must be a Profit or Gain. 2. The profit or Gain must be Realized. 3. The Profit or Gain must not be excluded by Law from income taxation What are the income subject to income taxation??? are these exemption absolute?? . What are the income exempted to income taxation??? Taxable Income/ Inclusion In Gross Income Compensation for services in whatever form paid. means all remuneration for services by an employee Gross income derivedperformed from the conduct of trade for or Honoraria Salaries & Wages his/her employer under the employer-employee business or exercise of profession relationship, unless expressly excluded the tax code. Gainsbyderived from dealings in property& Profit Commission Allowances Sharing Interests There are three classification of Interest under Rents Overtime, Separation Pay taxation: Royalties Hazard/emergency Pay Taxable Rent Income 1. Current rental payment Dividends 1. Subject to Income Tax w/o 2. Interest Advance rental/security deposit Others(Fringe Benefits) subject to Final tax Annuities 2. Interest restriction Interest subject to in taxbehalf of the lessor 3. Paymentnot of the lessee Prizes and 3. winnings Prizes & Winning 4. Accrued rent Income Pensions 1. Exempt Prizes 5. Income from leasehold improvements 2. Taxable Prizes (Final or Regular Tax) income of Partner’s distributive share from the net 3. Taxable Winning @ 20% final Tax the general professional partnership 4. Exempted Winning ( PCSO & Lotto winning) Non-Taxable Income/ Exclusion In Gross Income A. Retirement benefits received under Republic Act No. 7641 and those received by officials and Proceeds of Value ofemployees of private firms, whether individual or life corporate, in accordance with a reasonable private Compensation property benefit plan maintained by the employer: insurance Returns of for by personal acquired B, SSS, GSIS retirement benefits paid to premiums heirs injuries or Retirement Gifts, Requisites of Exemption: Income of sickness plus benefits, C. Separation Pay received due to any cause 1. The employer maintained a reasonable private bequest or exempt beneficiaries amount of any Pensions, beyond the control of the employee benefits plan. devise or under Treaty Miscellaneous 2. The retiring official or employee has been in the damages descent service ofgratuities, Items for at least ten (10) the same employer received etc. years. 3. The retiring employee is not less than fifty (50) years of age at the time of his retirement. 4. This is the first time availment of the retirement benefits exemption. Non-Taxable Income/ Exclusion In Gross Income Miscellaneous Items cont.… Income derived Contributions Prizes /awards by the made in to SSS, Income derived government or recognition of and Prizes by foreign GSIS,religious, Gains from sale its political awards granted Government Gains from subdivisions Philhealth, charitable, of ,Bonds, to athletes 13th month scientific, redemption Pag-Ibig and sanctioned debentures or by pay & other educational, of shares in other Athletic Unionartistic, Duesliterary or Sports De not minimis benefits certificates of commission Mutual civic achievement Benefits exceeding indebtedness funds. P82,000 EXERCISE NO. 1 Benefits or Remuneration Taxable Non- Taxable 1. Interest income from a depository banks. NO YES 2. Security deposit received for rental with restriction. NO YES 3. Proceeds from a life insurance received by the heirs beneficiaries. NO YES 4. Prizes received by Ms. Universe, Pia Wurtzbach YES NO 5. Retirement benefits from SSS or GSIS. NO YES 6. Basic Salaries/ wages. YES NO 7. 13th & 14th month pay not exceeding 82,000. NO YES 8. Interest income from a tax exempt Cooperative. NO YES 9. Separation pay received due to resignation. YES NO 10. 25,000 received from donation/gift. NO YES Questions? Thank you!!! ...
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