MILLORA, Aidan Frank F.

4LM1

Mr. Simpson is employed as a chef in Maks Resto - House of Happy Chicken. He received as employee
of Maks, for the taxable year 2020 the following :

1) monthly compensation in the amount of Php 70,000.00 a month, with 13th month pay.
a) The employer withheld the amount of Php95,000 as withholding income tax.

2) He was named as best Chef of the Year given by the restaurant he is and he received the
amount of Php100,000.00 as reward.

3) Because of his good performance, he was given a scholarship by the Company for a training
at Culinary Institute of America valued at P500,000.00

Mr. Simpson also operate his own canteen called Mr. Simpson Canteen, organized as single
proprietorship business .

4) For the said taxable year, he had a total sales revenue of Php5,000,000.00.

5) He also received that following .

a) From the savings deposit with the BPI, he earned P10,000 as interest income
(which was subjected to final withholding tax of 20% or the total amount of Php2,000.

EXPENSES

a) For the meat and vegetable, and canteen supply expenses amounted to P500,000.00.
b) He paid salary to his employees in the canteen business amounting to P300,000.00.
c) He borrowed P1million on the same year from BDO and paid P50,000 as interest, the money
was used for the renovation of the canteen .
d) He also borrowed money from his brother in the amount of P3million pesos, and paid interest in
the amount of 300,000 on the same year. The money as additional capital.
e) He bought a electric fryer and an oven (with usable life of 5 years) at the cost of P200,000.00.
Said equipment is to be used in his canteen.
f) Mr. Simpson paid electricity, water bill for his residence in the amount of P120,000 and for
his canteen business P500,000.00

QUESTION:

A. If Mr. Simpson is a managerial employee, how much will his tax payable / refund be?
- P 1,300,656.00 - P 95,000.00 = P 1,191,149 Tax Payable

B. If Mr. Simpson is a rank and file employee, how much will his tax payable / refund be?
- P1,205,656 Tax Payable
C. What are the options of Mr. Simpson if under fact number 4, his total sale is only 2.5 million?
Show the best option by computing the tax payable in each of the option shown.
- P 1,300,656.00 - P 95,000.00 = P 1,191,149 Tax Payable

D. What if Mr. Simpson donated the sum of P100,000 to his church , how much will his tax payable
under the facts stated above ?
- = P45,333.00
- = P1,191,149.00 Tax Payable
E. What if Mr. Simpson is just an employee, will answer be the same in letter D question?
- No.
F. What if the Canteen is operated as a one person corporation, will HIS tax payable be the same
as operating it as single proprietor ?
- Yes.