Topic 8: Exclusions from Gross Income

Let’s Practice

Exercise Drill No. 1: Determining the Taxability of an Item

Directions: Read each statement below carefully. Place a T on the space provided if you think
the item is Taxable. Place an NT on the space if you think the item is Non-taxable.
1. Thirteenth month pay in excess of P90,000
2. Overtime pay of Minimum wage earners.
3. Separation Pay due to voluntary resignation
4. Amount received in payment of moral damages due to physical injuries.
5. Income derived by Baguio City in leasing Burnham Park
6. Novel Prize received due to civic achievement contributions.
7. Statutory minimum wage of MWE who has no other reportable income
8. Union due contributions
9. Interest Income
10. Magsaysay awards
11. Maternity Benefits
12. GSIS Retirement Benefits
13. Dividend income derived in the Philippines by Taiwan government
14. Interest Income derived by Philippine National Red Cross
15. Terminal leave pay or the commutation of accumulated unused leave credits.

Exercise Drill No. 2: TRUE/FALSE

Directions: Read each statement below carefully. Place a T on the space provided if you think a
statement is TRUE. Place an F on the space if you think the statement is FALSE.
1. All prizes and awards are subject to income tax
2. Income of commercial partnership is taxable
3. Income derived by a political subdivision of the government is not taxable
4. The income of OFWs outside the Philippines is exempt from income tax
5. 13th month pay and other benefits are taxable only up to P90,000
6. The employer’s share to SSS, PHIC and HDMF are exclusion in gross Income
7. Cooperatives, regardless of their classification are taxable on income from their
unrelated activities
8. The gain on the sale of long term bonds with a maturity of five years is exclusion in
gross income.
9. A BMBE must have a net asset not exceeding P3,000.000 to be exempt.
10. Benefits of veterans of war or retired US Army Personnel are excluded in gross income.
11. GSIS and SSS benefits are included in gross income to the extent they exceed P90,000
12. It is sufficient that the employee rendered more than 10 years of service for his
retirement benefit to be exempt.
13. The amount received in excess of the premium paid in insurance contract constitutes an
item of gross income
14. Items of Income subject to final tax or capital gains tax are exclusions in gross income
subject to regular income tax
15. Prizes from contests are included in gross incomesubject to regular income tax

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 Topic 8: Exclusions from Gross Income

ANSWER FORMAT

Exercise Drill No. 1 Exercise Drill No. 2

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