Republic of the Philippines

CAVITE STATE UNIVERSITY

Don Severino delas Alas Campus
Indang, Cavite

KAPANGYARIHAN, HAZEL T. BSOA 4-4

201812835 OCTOBER 25, 2021
REFLECTION PAPER

INCOME TAXATION: BASIC STRUCTURE, DEFINITION CONCEPTS

As a citizen in our country, it is important for us to know not only the amount of tax that we are going
to pay. It is also important for us to know if we are paying it in a correct and right way. Understanding
the basic structure, definition and concepts of income taxation help is to have knowledge and to be
aware of the right process of paying taxes. It is a tax based on all your yearly profits coming from a
property, business or even a persons salary or income.

These are the things I have learned from our lesson:

PURPOSE OF INCOME TAX

 To provide revenues for the government

 To redistribute wealth from the rich to poor
 An income tax is a tax imposed on individuals or entities (taxpayers) in respect of the income or
profits earned by them.
 Provide large amount of revenues to offset evils arising from the inequalities in the distribution
of income and wealth
 It brings us balance
 Taxes are made for us to feel that we are not unequal. Without the Income Tax, Value added tax
become high

DIFFERENCE BETWEEN INCOME AND CAPITAL

 INCOME

• a gain or recurrent benefit usually measured in money that derives from capital. Stocks dividends are
not considered as an income.

• means accession to wealth, gain or flow of wealth

• denotes a flow of wealth during a definite period of time

• Income is the fruit

  CAPITAL

• a wealth in the form of money or other assets owned by a person

• in short capital is a wealth or fund and income is a service or flow of wealth

• is a fund or property existing at one district point of time

• Capital is the tree

= Three Sources of Income =

• source of income within the Philippines

• sources without the Philippines

• sources partly within and partly without the Philippines

There are kinds of taxable income: Capital Gains, Ordinary Gains and Presumed Gain.

• Capital Gains – is an increase in a capital assets value and is considered to be when the asset is sold.

• Ordinary Gains – is an income which are jot capital assets. Example of this is salary.

• Presumed Gain – general rule is that you’re required to pay 6% in income generated from the sales of
the property. There is an exception to the rule, example of this is if you sell a hoise because the purpose
is to build a new house, you don’t have capital gains tax. It is possible once every 10 years and also you
need to consume all the payments in building or in constructing a new house because if you don’t, you
are required to pay capital gains tax of 6%.

General Professional Partnership – is liable for income tax but is individual payment of taxes.