WAYS OF

REMITTING TAX

FINAL WITHHOLDING TAX SYSTEM RETURNABLE INCOME TAX RETURNS

Filed & paidd

Filed & by the Income
remitted by earner
Payor
 CONCEPT OF INCOME

The Free Dictionary Definition:

The amount of money or its equivalent received during a period of time

• in exchange for labor or services, Compensation or Salaries
• from the sale of goods or property, or
• as profit from financial investments.

Business Income = Sales – Cost of sale

Interest Income
 NET WORTH METHOD
OF ASSESSING
Revenue Memorandum Circular 43-74: INCOME
Basic concept of this net worth method of determining income is that any
Increase in taxpayer’s net worth
income , after making some adjustments,
constitutes
The net worth method is an extension of the accounting principle:
Assets minus liabilities = Net worth

.
The taxpayer’s net worth is determined both at the beginning and at theend of the
same taxable year. The general theory underlying this method is that the taxpayer’s
money and other assets in excess of liabilities after accurate and proper
adjustment of nondeductible and nontaxable items not accounted for in his tax
return is deemed to be his unreported income.
 NET WORTH METHOD
CONCEPT OF INCOME

Assets - Liabilities = Net Worth

End, (December) 1,000,000 200,000 800,000

Beginning,(January) 2,000,000 1,600,000 400,000

Increase in net worth 400,000

Let us assume that during the taxable year, the taxpayer inherited P500,000 property and also incurred
personal expenses of P900,000.

Adjustments:
Inheritance received Taxable with transfer tax ( 500,000)
Personal expenses Earlier earned, before these are consumed 900,000
Income 800,000
 INCOME TAXATION
(Assessment of Taxable Income)
GROSS RECEIPTS/COLLECTIBLES (Increase In Net worth) 5,000,000

EXCLUSION FROM INCOME 1,000,000 P1,000,000Donation

received
INCOME 4,000,000
P200,000 Gain
INCOME EXEMPT FROM TAXATION 200,000 from Mutual Fund

TAXABLE INCOME 3,800,000

Interest Income,
Manner INCOME COLLECTED WITH FINAL WITHHOLDING TAX 1,000,000 collected with Final tax
of P200,000
of
Taxation TAXABLE/RETURNABLE INCOME (in 1701 or 1702)
2,800,000
 SECTION 32, NIRC
Gross Income
Except when otherwise provided in this Title, gross income means all income derived
from whatever source, including (but not limited to) the following items:

Compensation for services to employer in whatever form paid, including, but not limited to
fees, salaries, wages, commissions, and similar items; Pensions

Business Income Gross income derived from the conduct of trade or business or the
exercise of a profession,

Rents.

Partner's distributive share from the net income of the general

professional partnership.

Gains derived from dealings in property considered as CAPITAL ASSETS ( not INVENTORY, not item of PPE)

Passive Income = Interest; Royalties; Dividends; Prizes ; winnings; Annuities

 SOURCES OF INCOME
Income earned within the Philippines:
Salaries from employment in the Philippines
Sales of goods in the Philippines
Rent on property located in the Philippines

Income partly earned within and partly outside the Philippines:

Gross receipts Within = from transport of Passengers from

Phil.
Philippine port to Foreign port. Port Within
Foreign
Port
EXAMPLE:W/I
the P1M gross receipt isW/O
earned for flight originating in
Philippines to Hongkong stop over and finally to USA.

Income earned from outside the Philippines:

Interest income on deposit in foreign bank outside the

Philippines
RELATED VIDEO , Links:

WITHHOLDING TAX https://youtu.be/PL0Z7vKKIpY

TAXPAYERS https://youtu.be/Z9nSbaKsOmc

TAXPAYERS/SOURCES OF INCOME https://youtu.be/r4GDqqFztZw