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JUNIO, CPA Notre Dame of Midsayap College Midsayap, Cotabato

It includes all income from whatever source (unless exempt from tax by law) including. but not limited to the following items: Gross Income Defined .Gross income means the pertinent items of income referred to in Section 32(A) of the Tax Code.

salaries and wages. . Annuities 8. Prizes and Winnings 9. Pensions 10. commissions. Rents 6. and similar items 2. Gross Income derived from the conduct of trade or business or the exercise of a profession 3. Compensation for services in whatever form paid including fees.1. Royalties 7. Partners’ distributive share from the net income of general professional partnership. Interests 5. Gains from dealings in property 4.

compensation income is obtained from and employer-employee relationship between payor and recipient. Generally.Gross Compensation Income Gross Compensation Income means any remuneration for rendering personal services. .

4. 5. 2.Classification of Gross Compensation Income 1. 8. 7. Basic salary or wage Honoraria Fixed or variable allowances Commission Fees Tips and gratuities Hazard or emergency pay Retirement pay Separation pay . 3. 6. 9.

Other forms of compensation . Beneficial payments 17. Profit sharing 15. Pension 11. Thirteenth month pay and other benefits 13.10. Vacation and sick leave 12. Overtime pay 14. Awards for special services 16.

day or week.Basic salary or wage Salary refers to earnings received periodically for a regular work other than manual labor. as by the hour. such as a monthly salary of an employee. are earnings received usually according to specified intervals of work. on the other hand. . Wages.

Honoraria Honoraria are payments given in recognition for services performed for which established practice discourages charging a fixed fee. .

in addition to the regular compensation: •Transportation •Representation •Others such as COLA .Fixed or variable allowances •Are received by public officer or employee or officer or employee of private entity.

Commission Commission is usually a percentage of total sales or on certain quota of sales volume attained as part of incentives .

such as clerks of court or sheriffs for services rendered in the performance of their official duty over and above their regular salaries •Legal fees paid by a union on behalf of its president constitute compensation.Fees •Fees are received by an employee for the services rendered to the employer including a director’s fee of the company. fees paid to the public officials. •Marriage fees. baptismal offerings received by a clergyman for services rendered are considered compensation .

.Tips and gratuities Tips or gratuities paid directly to an employee which are not accounted for by the employee to the employer.

This is normally added to the basic salary together with the overtime pay and night differential pay to arrive at gross salary. .Hazard or emergency pay This is an additional payment received due to workers. exposure to danger or harm while working.

Retirement pay It refers to a lump sum payment received by an employee who has served a company for a considerable period of time and has decided to withdraw from work into privacy. .

Retirement pay due to old age provided that the following requirements are met: a. Availed for the first time .Retirement pay is taxable. except: 1. At least 10 years employed d. At least 50 years old e. Approved by the BIR b. Reasonable c. SSS or GSIS retirement pays 2.