a ~ Excel Professional Services, Inc. ~ Management Firm of Professional Review and Training Center. (PRTC) Wacel (Luzon) Manila 7339344/7347903 * Calamba, Laguna (049) 5453807 Soe (Wisayas) Bacolod City (034) 4346214 * Cebu City (032) 2547900 loc. 218 {Wtindanao) Cagayan De Oro City (088) 3093073 * Davao City (082) 2260049 TAXATION SIA/TABAG R ‘TAX.2606-Income Tax on Individuals CPA REVIEW MAY 2019 LECTURE NOTES A. Employment Certificate, (QEC). (RR No 1 2011) , fesident citizen (RC) Nonresident Citizen (NRC) (Overseas Contract Worker (OC Resident Alien (RA) Non-resident Alien (NRA) a) Engaged in trade or business (ETS) b) Not engagad in trade or business (NETB) 6. Special Employees (Prior to TL) a) Special Alien Employees (SAE) b) Special Filipino Employees (SFE) . NONRESIDENT cLTIZEN The following are considered nonresiden’ (Section 22(E), RA 8424) 1. A attizen of the Philippi the satisfaction of th fact of his physical presence ab definite intention to reside thereit iteens 2. A citizen of the Philippines who Philippines auring the taxable year to abroad, elthey as an immisr employment on a permanent 3._A citizen of the Philippines derives, incom? from ‘abroa employment thereat requires physically present abroad most of the time during the taxable year; 4, Accitizen who has b n previously considered as nonresident citizen and who errives in the Philippines shall likewise be treated as a nonresident citizen for the taxable year in Which he arrives in the Philippines respect to his income derived from sour: abroad UNTIL the date Philippines. NOTE: All those citizen taxpaye not qualify on the above enumerations will be considered as RCs. OVERSEAS CONTRACT WORKER) ¥ Overseas Contract Workers (OCW's) refer to Filipino citizens employed in foreign countries, commonly referred to as Overseas Filipina Workers (OFW), who are physically present in a foreign country as @ consequence of their employment thereat ¥ ‘Their salaries and wages are pad by an employer abroad and is not borne by any entity or person in the Philippines: ¥ To be considered as an OCW or OFW, they must be duly registered as such with the Philippine Overseas Employment Adininistration (POEA) with a valid Overseas ¥ A seaman who is a citizen of the.Philippines and who receives compensation for services rendered abroad as a member of the complement of a vessel engaged, exclusively * international trade shall be treated as an overseas contract worker, (Section 23 (C), RA 8424) Yin order for seafarers or seamen to b considered as OCW's or OFW's they must be duly registered as such with the Philippine Overseas Employment Administration (POEA) with a valid Overseas Employment Certificate (OEC) with a valid Seafarer’s, Identification Record Book (SIRB) or Seaman's Book issued by the Maritime Industry Authority (MARINA) . (RESIDENT ALIEN Resident Allen means an, individual whose residence is within the Philippines and who is not 2 citizen thereof. (Section 22 (F), RA 8424) Under RR No, 2, the following are considered as sident alle fn alien actually present (h the Philippines hho s NOT a mere transient or sojourner; A person’ who comes to the Philippines for a definite purpose which in its nature may be promptly accomplished 1s, transient An alien, who comes to the Philippines for 2 definite purpose, which, by its nature, would require ‘an extended: stay making his home temporarily in the Philipines shall come to the Philippines with na definite ‘intention as to his stay (floating intention) : ‘Aa alien who has acquired Tesidence in the Philippines retains his status as @ resident unti he abandons the same and actually depart from the Philippines. [NON-RESIDENT ALIEN — 1 ygegein trae on busier Scion 25 . Nonresident citizen ¢. Special Filipino employee ; | d._ None of the above Cheche, nonresident citizen, arrived in the Philippines. on July 1, 2015 to reside here | permanently after working as nurse in the United States of America for many-years. > = Which of the following statements Is correct with respect to her classification for income tax purposes? 4. She shall be classified as nonresident citizen for the year 2015 with respect to her income derived from sources abroad from January 1, 2015 until the date of her atrival in the Philippines: a b, She shall be classified as nonresident citizen for the whole year of 2015. . She shall be classified as resident citizen for the whole year 2015,C 74. statement 1 75, Statement 1 PROFESSIONAL SERVICES, INC. The income subject to tax personal exemption) ae paces g, F200,000 should be (disregard € 73: Allan, single, is a minimum wage earner of EDT Corporation. He is also er He Is Ngaged in trading various Consumer products every weekend. He derived Brofit therefrom amounting to P300,000 for theRAInss 2018 taxable year. In addition to nis basic minimum wage of P160,000 for the year, he likewise received the following additional benefits from his employer: + De miniminis, 40,000 (all within the ceiling) + 13™month pay and other benefits, P68,000, Allan’s taxable income should be a. P160,000 200,000 b. P250,000 4. 150,000 Generally, qualified Senior Citizens deriving returnable Income during the taxable year, whether from compensation or otherwise, are required to file their income tax raturns and pay the tax as they file the return. Statement 2: A Senior Citizen who is a Compensation Income earner deriving from only fone employer but whose income had been Subjected to the withholding tax on compensation, shall, although not exempt from incorie tax, be entitled to the substituted filing of income tax a. Only statement 3 is correct b statement 2 is corre ¢ ments are correc d ments are incorrect CGT on sale of real properties shell be paid within 30 days from sale or disposition. Statement 2: The CGT on the unutilized portion of the proceeds in case of sale of 2 real property DB 7s. ks 5 83 Classiied a6 a principal residence shall be.oad — the expirat at ei é D Statement True False True False Statement2 True False False True 76. whe of the following may aval of substituted fling of income Tax Return (TTR)? Betapcamelien Return 08)?! Peperiving compensation income ‘rom ABC Company, her only employer for the taxable vear + The correct amount of tax, was withheld by ‘ABC Company + She algo S010 her personel car and some of her Jewelries resulting to 2 capital gain of 100,000. PEDRO: c Deriving purely compensation income from XYZ Corporation, his only employer for the taxable year. + The correct afnount of tax was withheld by XYZ + Pedro's spouse is engaged in business Biv! a. Ana only © Anaand Pedro. vAv b. Pedroonly — d._ Neither Ana nor Pedro 1A. 77. Ms. €€Q operates a convenience store while she 13 of 14 offers bookkeeping services to-herclients. In 2018, ~ her gross sales amiounted td o8 in addition 3% to her receipts from bookReeping services of {2300,000. She incurred cost of sales and operating expenses amounting to Pi ‘and 200,000, respectively. She already signified her intention to be taxey. at-8% ifcome tax rate In her 1* quarter return, slne5S How much [s the Income tax liabjity for the year? a, P68,000 c, Pas, , P10,000 d, 60,000 Based on the preceding number, if Ms. EBQ failed to signify her intention to be taxed at 8% income tax rate on gross sales on her initial Quarterly Income Tax Return, her income tax liability is a. P68,000 c, P88,000 b, 10,000 d, 60,000 Mr. MAG, a financial Comptroller of JAB Company 941 earned annual. compensation inconie-m—2078 of 21?) Beret the amount of 120,000 but net of mandatory contributions to SSS and Philhealth Aside from employment income, he owns a convenience store, with grass sales of 2,400,000 His Cast of Sales and operating expenses are 3,000,000 ang 600,000, respectively, and with non-operating income’ of 100,000, How, much i the total income tax due Is: ae 3,000 ¢, 313,000 d. 493,000 Based on the preceding number, if-he did not opt for the 8% income tax, his income tax due is a, 513,000 ce, P313,000 589,200 d. 493,000 Gh February 2019, the taxpayer tendered his ‘esigilation tO concentrate. on his business. His total compensation income amounted to P150,000, inclusive of benefits of 20,000. His business operations for 2019 remains the same. He opted for the-8% income tax rate. His income tax liability ‘a. 200,000 , P5B9,200 c. P190,400 d, P493,000 Ms, Cyril is employed in MAFD Corporation and is also a part-time real estate agent for a real estate broker. In addition to SMW of A180,000 she received from her employer, she likewise received 75,000 as commissions from her coal_estate dealings for the year 2018. How much is the iicome tax liability for’ the year under the graduated Income tax (IT) regime? a, P1,000 c. P20,400 bb, P6,000 d.nil Based on the preceding number, how much is the income tax liability under the 8% IT regime? a. P1000 , 20,400 , 6,000 di, nil TAX.2606 inclusive of 13" month and other \a\9