e) EFFECT OF PAYMENT: Failure

to pay a tax does not make the

business illegal
WHILE failure to pay license fee
makes business illegal.
f) SURRENDER: Taxes, being
lifeblood of the state, cannot be
surrendered
except for lawful consideration
WHILE a license fee may be
surrendered with
or without consideration.
IMPORTANCE OF DISTINCTION
BETWEEN TAXES AND LICENSE
FEES.
It is necessary to determine
whether a particular imposition is a
tax or a
license fee, because some limitations
apply only to one and not to the other.
Furthermore, exemption from taxes
does not include exemption from
license
fees
TAXES DISTINGUISHED FROM
OTHER IMPOSITIONS:
1) toll – amount charged for the cost
and maintenance of property used;
2) compromise penalty – amount
collected in lieu of criminal
prosecution in
cases of tax violations;
3) special assessment – levied
only on land based wholly on
the benefit
accruing thereon as a result of
improvements of public works
undertaken by
government within the vicinity.
4) license fee – regulatory imposition
in the exercise of the police power of
the
State;
5) margin fee – exaction designed to
stabilize the currency
6) custom duties and fees – duties
charged upon commodities on their
being
imported into or exported from a
country;
7) debt – a tax is not a debt but is an
obligation imposed by law.
Special assessment v. tax
1. A special assessment tax is an
enforced proportional contribution
from
owners of lands especially benefited
by public improvements
2. A special assessment is levied only
on land.
3. A special assessment is not a
personal liability of the person
assessed; it is
limited to the land.
4. A special assessment is based
wholly on benefits, not necessity.
5. A special assessment is exceptional
both as to time and place; a tax has
general application.
Republic v. Bacolod, 17 SCRA 632
A special assessment is a levy on
property which derives some special
benefit
from the improvement. Its purpose is
to finance such improvement. It is not
a
tax measure intended to raise
revenues for the government. The
proceeds
thereof may be devoted to the specific
purpose for which the assessment was
authorized, thus accruing only to the
owners thereof who, after all, pay the
assessment.
Some Rules:
An exemption from taxation does
not include exemption from a
special
treatment.
The power to tax carries with it a
power to levy a special assessment.
6
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Toll v. tax
1. Toll is a sum of money for the use
of something. It is the consideration
which
is paid for the use of a road, bridge, or
the like, of a public nature. Taxes, on
the other hand, are enforced
proportional contributions from
persons and
property levied by the State by virtue
of its sovereignty for the support of
the
government and all public needs.
2. Toll is a demand of proprietorship;
tax is a demand of sovereignty.
3. Toll is paid for the used of
another’s property; tax is paid for the
support of
government.
4. The amount paid as toll
depends upon the cost of
construction or
maintenance of the public
improvements used; while there is no
limit on the
amount collected as tax as long
as it is not excessive,
unreasonable, or
confiscatory.
5. Toll may be imposed by the
government or by private individuals
or entities;
tax may be imposed only by the
governmen

Chapter 1 Cash and Cash

Equivalents
Assets – economic resource
controlled by the entity as a
result of past events.
Economic resource – a right
that has the potential to produce
economic benefits embodied in
any of the following ways:
a. Used to singly or with other
assets in the production of
revenues
b. Used to acquire other assets,
or settle a liability, or distribute
to the enterprise owners
Nature – a factor that
determines which accounting
standard is applicable to its
recognition and
measurement.
Financial assets – group of
assets evidenced by financial
instruments.
Nature of Financial Assets
According to IAS 32, Financial
Instrument – is any contract that
gives rise to a financial asset of
one entity and a financial
liability or equity to another.
Holder – financial asset
Issuer – financial liability or a
component of shareholder
equity
Financial assets – arises from a
contract that entitles the holder
to receive cash or another
financial asset. It also includes
derivatives.
Derivative – a financial
instrument that meets all of the
following characteristics:
a. Its value changes in response
to change in specified interest
rate, commodity price,
financial instrument price,
foreign exchange rate, price
index, credit rating or credit
index, or other variables.
b. It requires no initial net
investment, or initial net
investment smaller than that
required
in similar contracts; and
c. It is settled at a future date
(ex. Options and warrants that
enable holders to acquire equity
shares of other entities.)
Financial assets and liabilities
are within the scope of IFRS 9
Financial Instruments.
Recognition of Financial Assets
- Depends on the attributes or
relevance and faithful
representation.
- The probability of a flow of
economic benefits and existence
uncertainty affect the
relevance of information
- IFRS 9 provides that an
entity shall recognize a financial
asset in its statement of a
financial position when and
only when the entity beco the
contr