N O T R E D A M E O F M ID S A Y A P C O L L E G E

M id s a y a p , C o ta b a to
C O L L E G E O F B U S IN E S S A N D A C C O U N T A N C Y

IN C O M E T A X A T IO N

A S S IG N M E N T

I n s t r u c t i o n : S o lv e t h e f o llo w in g p r o b le m s . W r it e y o u r a n s w e r s in a y e llo w p a p e r . P r e s e n t
your s o lu t io n in good fo rm . E rasu res are s tric tly p ro h ib ite d . A s s ig n m e n t w ill be
s u b m it t e d n e x t w e e k d u r in g o u r t a x a t io n c la s s .

P R O B LE M 1 . P u re ly C o m p e n s a tio n In c o m e

M r . H a b ib i is c u r r e n t ly e m p lo y e d b y N D M C C o m p a n y a s a m in im u m w a g e e a rn e r.

H is e m p lo y m e n t is h is o n ly s o u r c e o f in c o m e . H is t o t a l c o m p e n s a t io n in 2023 is

P 1 6 0 ,0 0 0 .

A . M r . H a b ib i’s c o n t r ib u t io n t o S S S , P h ilh e a lt h a n d H D M F t o t a l P 9 , 0 0 0 w h ile h is

th
13 m o n t h p a y is P 1 3 , 0 0 0 . H o w m u c h is h is in c o m e t a x lia b ilit y f o r 2 0 2 3 ?

th
B . A s id e f r o m r e c e iv in g h is b a s ic w a g e a n d 1 3 m o n t h p a y a s in t h e p r e v io u s y e a r ,

he a ls o r e c e iv e d th e f o llo w in g a d d it io n a l pay c o n s is t in g of th e f o llo w in g :

o v e r t im e pay – P 1 0 0 ,0 0 0 , n ig h t s h if t d if f e r e n t ia l – P 4 5 ,0 0 0 , h a z a rd pay –

P 3 5 , 0 0 0 , a n d h o lid a y p a y – P 2 5 , 0 0 0 . C o m p u t e f o r M r . H a b ib i ’s in c o m e t a x d u e

fo r th e y e a r 2 0 2 4 ?

P R O B LE M 2 . P u re S e lf-E m p lo y m e n t

1. A r c h it e c t H a b ib i o ffe rs a r c h it e c t u r a l d e s ig n s e r v ic e s . H e is a ls o th e s o le

p r o p r ie t o r o f H a b ib i S u p p lie s S t o r e . I n 2 0 2 3 , h e r g r o s s r e c e ip t s f r o m s e r v ic e s

a m o u n t e d t o 7 5 0 , 0 0 0 w h ile h is g r o s s s a le s f r o m t h e s t o r e w a s P 1 , 5 0 0 , 0 0 0 . H e

h a s a v a ile d o f t h e 8 % in c o m e t a x r a t e .

Q u e s t i o n s : C o m p u t e t h e f o llo w in g :

a) W h a t is M r . H a b ib i’s in c o m e t a x lia b ilit y f o r 2 0 2 3 ?

b) W h a t is M r . H a b ib i’s b u s in e s s t a x lia b ilit y f o r 2 0 2 3 ?

2. I f A r c h it e c t H a b ib i d id n o t o p t t o b e t a x e d a t 8 % in c o m e t a x r a t e . A s s u m in g , h is

cost of s a le s in c u r r e d in 2023 a m o u n te d to P 1 ,1 0 0 ,0 0 0 w h ile o p e r a t in g

e x p e n s e s to P 4 5 0 ,0 0 0 .

Q u e s t i o n s : C o m p u t e t h e f o llo w in g :

a) W h a t is M r . H a b ib i’s in c o m e t a x lia b ilit y f o r 2 0 2 3 ?

b) W h a t is M r . H a b ib i’s b u s in e s s t a x lia b ilit y f o r 2 0 2 3 ?

A S S IG N M E N T – IN C O M E T A X A T IO N P age 1 of 1