LAS FABM2 QTR 2, wk4

Republic of the Philippines
Department of Education
REGION V
SCHOOLS DIVISION OF MASBATE PROVINCE
CATAINGAN NATIONAL HIGH SCHOOL
LEARNING ACTIVITY
SHEET (LAS) QTR 2, Wk.4
Learner's Information:
Name of Learner:
Grade 12- ABM
Grade Level: S.Y. 2020 - 2021
EDWIN P. ABAL
Name of Teacher: T-III
Learning Area: FUNDAMENTALS OF ACCOUNTING, BUSINESS AND

LEARNING ACTIVITY SHEETMANAGEMENT
No. _____ 2
Address: Poblacion, Cataingan, Masbate

Telephone No.: (056) 578-3469
REGION V
FUNDAMENTALS OF ACCOUNTING, BUSINESS AND MANAGEMENT 2

QUARTER 2, WEEK 4
Name of Student : ______________________________________

Learning Area/Grade Level : ______________________________
Date : ___________________________
Subject Teacher : Mr. Edwin P. Abal, T-III
I – INTRODUCTORY CONCEPT
INCOME AND BUSINESS TAXATION
It is often quoted that there are only two permanent things in this world, CHANGE and
TAXES. Paying taxes is one of the basic resposibilities of every individual.
This topic introduces the basic concepts and fundamentals of income taxation on individuals
deriving income from compensation, business and other sources. For any income earner
who may be an entrepreneur, a practicing professional, a self-employed service contractor
or any person holding multiple jobs, knowledge of taxation is imperative.
Ther ordinary citizens engaged in legitimate trade or business no matter the size, should
have a professiona, knowledge-based approach to paying the correct kind and amount of
taxes. The best references will be the Nationa Internal Revenue Code of the Philippines, RA
8424 (Tax Reform Act of 1997), Tax Reform for Acceleration (Rev. Reg No. 8-2018) Tax
Reform Acceleration and Inclusion “TRAIN” Law and the Revenue Regulations subsequently
issued by the Bureau of Internal Revenue (BIR). Thus, if a responsible citizen generating
income wants to help improve society and bring our country to even greater heights,
knowledge and compliance with taxation rules and regulations are very essential.
Definition of Taxation :
1. Taxation = is the process by which the government, through our lawmakers, raises
income to pay it’s necessary expenses. Our Congress, through our senators and
congressman, enacts tax laws. Tax laws give our government the authority to collect
the necessary taxes from it’s constituents.
2. Taxation = is the process or means by which a sovereign state raises income by
imposing a charge upon persons, properties or rights to enable it to defray the
necessary expenses in discharging the government’s functions.

Telephone No.: (056) 578-3469
REGION V
Definition of TAXES :
1. TAXES = are the enforced proportional contributions from persons, properties or
rights by the lawmaking body of the state for the support of the government and all
public needs.
BASIC PRINCIPLES OF A SOUND TAX SYSTEM
1. Fiscal Adequacy :
The government should make sure that the amount of revenue collected is
enough to shoulder it’s different expenses. This would entail proper planning
and budgeting jon the part of our government officials concerned.
2. Theoretical Justice :
The burden of taxation should jbe proportionate to the ability of the taxpayer
to pay it. It should be noted that proportionality does not necessarily mean
equality in the amount of taxes to be paid. Persons who are earning different
amounts of income should not be forced to pay the same amount of income
taxes.
3. Administrative Feasibility :
The tax laws being promulgated by the government should be capable of just
and equitable administration. These must be clear to the taxpayers and can
be easily implemented by the tax authorities.
THREE INHERENT POWERS OF THE GOVERNMENT
1. Eminent Domain
This is the power of the government to take private property, upon payment
of just compensation, to be used for a public purpose.
The state can buy a certain private property, at it’s proper fair market value,
if they see the need for it to be converted to a public road or as a site for a
public hospital. The private citizen cannot refuse as long as the government
could prove that it is indeed for a public purpose.
2. Police Power

Telephone No.: (056) 578-3469
REGION V
This is the power of the government to make laws that will promote public
health, morals, safety, and welfare of the people. It can prohibit certain
activities and products if they feel that is detrimental to the people.
3. Taxation
The power of the government to collect taxes that will be used to finance the
different projects needed by the people.
INCOME TAXATION
The two biggest classification of income taxpayers are individuals and corporations.
For income tax purposes, individuals can be further classified into four, namely:
a. Resident citizen = is a Filipino citizen and lives or resides in the Philippines.
b. Non-resident citizens = is a Filipino citizen but does not reside in the Philippines.
c. Resident Alien = is a citizen of another foreign country but resides in the
Philippines during the taxable year.
d. Non-resident Alien (NRA) = is a citizen of another foreign country and does not
reside in the Philippines.
They can be further classified as one who is either:
1. Engaged in trade or business (NRA-ETB)
2. Not engaged in trade or business (NRA-NETB)
A Non-Resident alien individual is considered to be engaged in trade or
business if he or she shall go here in the Philippines and stay here for a total
period of more than 180 days during the calendar year. If this qualification is
not met by a non-resident alien, he or she will be considered as not engaged
in trade or business.
It should be noted that only resident citizens are taxable on income derived
from sources within and outside the Philippines. The other three are to be
taxed on income arising from sources within the Philippines. As an effect,
OFW’s are taxable only on their income arising from sources within the
Philippines. As non-resident citizens, the Philippine government will no longer
collect additional income taxes from their salaries abroad.

Telephone No.: (056) 578-3469
REGION V
KINDS OF INCOME
Individuals can earn from at least three kinds of income :
1. Compensation Income = this is the income received by employees working for
different companies. This is usually in the form of salaries, bonuses and allowances.
2. Business Income = this is the income generated by entrepreneurs (business) or by
different professionals like lawyers, doctors, and accountants (professional income).
They do not work as employees of other people.
3. Passive Income = these are income generated by different investments made by the
individual.
For purposes of compensation income and business income taken together will be
called as Gross Income, the following formula will be used.
GROSS INCOME – ALLOWABLE DEDUCTIONS = TAXABLE INCOME
The taxable income will then be subjected to tax rate, to compute for the income tax
payable to the Bureau of Internal Revenue (BIR).
II – LEARNING SKILLS
Define income and business taxation and it’s principles and processes. ABM_FABM12-IIj-15
III – ACTIVITIES –
Exercise – Identify the classification of the follwing individuals whether they are resident
citizens (RC), non-resident citizens (NRC), resident aliens (RA), non-resident aliens engaged
in trade or business (NRA-ETB), or Non-resident aliens not engaged in trade or business
(NRA-NETB) in 2015.
1. __________. Von Harold, a Filipino who was born in Cataingan, is now working as an
Accountant in one of the leading broadcasting company in Canada.
2. __________. Wendy, a Korean national, has been living and working here in the
Philippines since 1994.
3. __________. Jeddy, a Filipino residing in Quezon City visited Hongkong for a three
day leisure trip.
4. __________.Janzel Mae, an American member of a famous international band,
performed in a two day concert held in Cebu and Manila.

Telephone No.: (056) 578-3469
REGION V
5. __________. Jay Jasper, a Swedish national and a resident of Panama, stayed here in
the Philippines from February 2015 to December 2015. He is working on a certain
project for a local company.
6. Which is the power of the government to collect taxes that will be used to finance
the different projects needed by the people. ____________.
7. Which is the burden of taxation should be proportionate to the ability of the
taxpayer to pay it. ______________.
8. Which is the income generated by entrepreneurs. They do not work as employees of
other people. ____________.
9. “TRAIN” LAW stands for. ______________________________________________.
10. Gross Income minus Allowable Deductions equals. _________________________.
IV – ANSWER KEY
1. Non-resident citizen (NRC) 2. Resident alien (RA) 3. Resident citizen (RC)
4. Non-resident alien (NRA)
5. N0n-Resident Aliens (NRA-ETB) 6. Taxation 7. Theoretical Justice 8. Business
income
9. Tax Reform for Acceleration and Inclusion. 10. Taxable Income
V – REFERENCE
DepEd Textbook : Fundamentals of Accounting, Business and Management 2 by J.
Beticon et al.
Fundamentals of Accounting, Business and Managemet 2 by Ma. Elenita Balatbat
Cabrera, BBA, MBA, CPA, CMA.
Prepared by :
Edwin P. Abal, T-III

Subject Teacher

Telephone No.: (056) 578-3469
REGION V

Telephone No.: (056) 578-3469
REGION V

Telephone No.: (056) 578-3469

LAS FABM2 QTR 2, wk4

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Republic of the Philippines

Learning Area: FUNDAMENTALS OF ACCOUNTING, BUSINESS AND

Address: Poblacion, Cataingan, Masbate

FUNDAMENTALS OF ACCOUNTING, BUSINESS AND MANAGEMENT 2

Name of Student : ______________________________________

Address: Poblacion, Cataingan, Masbate

Address: Poblacion, Cataingan, Masbate

Address: Poblacion, Cataingan, Masbate

Address: Poblacion, Cataingan, Masbate

Edwin P. Abal, T-III

Address: Poblacion, Cataingan, Masbate

Address: Poblacion, Cataingan, Masbate

Address: Poblacion, Cataingan, Masbate

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