You are on page 1of 10

MARY JOY P.

JUNIO, CPA Notre Dame of Midsayap College Midsayap, Cotabato

refers to items or receipts not included in the determination of the taxable income because the law or treaty provides that they are exempt from income tax • .

Bequests. . and Devises •Compensation or Damages •Retirement Benefits. etc.•Tax exemption of MWE •Tax exempt contributions •Benefits under the Employer Convenience Rule •Proceeds of Life Insurance •Gifts.

•are business expenses and losses incurred which the law allows to reduce gross business income to arrive at net income subject to tax. .

•General business expenses •Interest •Taxes •Losses •Bad debts •Depreciation •Charitable and other cont. •Research and development •Pension trust .

•Salaries and wages •Supplies •Rental •Advertising •Travelling •Insurance premiums against fire .

•Are the arbitrary amounts allowed by the law as a deduction from the gross compensation income and/or net business income and/or professional income as the case may be. living or family expenses. . for personal.

.  2. Additional exemption is a deductible allowance in addition to the basic personal exemption allowed for qualified dependent children. 1. Basic personal exemption is a deductible allowance which amount allowed by law shall depend upon the status of the individual taxpayer himself.

not gainfully employed and not more than 21 years old.Living with taxpayer 4.The dependent must be: 1. .A taxpayer’s child 2.Not married.Chiefly dependent for support 3.

Dela Cruz. married to Mrs. Dela Cruz.000.000.00  The total personal exemptions would be:  Basic personal P50. a plain housewife.00  Additional 100. with 6 qualified dependent children has a compensation income of P240.000.00 . Mr.