TAXATION

- The act of
collecting taxes.
- This power is
vested in the
government,
whether local or
national.
TAXES
- are compulsory
payments
associated with
income,
consumption, or
holding of property
that individuals and
corporations are
required to make
each year.
THE NEED FOR
TAXATION
- 1. As funds to
maintain the
various functions
of the
government, and
the different
activities it
deems
important.
THE NEED FOR
TAXATION
. To sustain
viability of the
government in
providing the
necessary
services for the
people.
OBJECTIVES OF
TAXATION
1. to raise funds
. to redistribute
wealth
3. to regulate
consumption
4. to protect local
industries
INCOME TAX
TAX ON
INDIVIDUALS
ndividuals, as
income taxpayers,
fall into two general
categories:
a. citizens
b. aliens
INCOME TAX
A citizen may
be a resident
citizen or a non-
resident citizen.
INCOME TAX
Alien individuals
1. are classified into
resident aliens, and non-
resident aliens.
. are in turn classified
into
a. those engaged in
trade, business or practice
of profession in the
Philippines and
b. those not
engaged in trade, business
or practice of profession,
in the Philippines.
An individual is a citizen of the
Philippines by definition of the
Constitution of the Philippines.
Under the Constitution,
a. an individual may be a
citizen of the Philippines at birth
(i.e. one whose father or mother
is a citizen of the Philippines),
b. or may become a
citizen of the Philippines
sometime after birth (i.e. one
who is naturalized in accordance
with law).
Philippine citizenship may be lost
or required in the manner
provided by law.
A non-resident citizen
is a citizen who:
a. establishes to
the satisfaction of the
Commissioner of
nternal Revenue the
fact of his physical
presence abroad with
a definite intention to
reside therein; or
b. leaves the Philippines
during the taxable
year to reside abroad;
1. as an immigrant;
or
. for employment
on a permanent basis; or
3. for work and
derives income from
abroad and whose
employment thereafter
requires him/her to be
physically abroad most of
the time during the
taxable year; or
c. was previously a non-
resident citizen and who
arrives in the Philippines at
any time during the taxable
year to reside permanently
in the Philippines.
He shall be considered a
non-resident citizen for the
taxable year in which he
arrives in the Philippines
with respect to his income
derived from sources
abroad until the date of his
arrival in the Philippines.
A citizen of the
Philippines who
shall have stayed
outside the
Philippines for 183
days or more by
the end of the
year is a non-
resident citizen
for the year.
PERSONAL EXEMPTIONS OF
CITIZENS AND RESIDENT
ALIENS
a. Married person:
f only one spouse is deriving
taxable income, only said spouse
may claim the personal exemption.
f a married person is not legally
separated from his spouse, his
basic personal exemption is
P32,000.
f legally separated from the
spouse, without any dependent,
his basic personal exemption is
P20,000.
f legally separated from the
spouse with a dependent, he may
qualify as head of the family, with
a basic personal exemption of
P25,000 and with an additional
exemption of P8,000, if the
dependent is a child.
b. Head of the Family:
(Under the National nternal
Revenue Code)
An unmarried or legally
separated man or woman with:
a. one of both parents,
b. or both parents,
c. or with one or more
brothers or sisters,
d. or with one or more
legitimate, recognized natural or
legally adopted children,
Living with and dependent upon
him or her:
a. for their chief support,
b. where such brothers,
sisters or children are not more than
twenty-one years of age, unmarried,
and not gainfully employed,
c. or where such brothers,
sisters or children, regardless of age,
are incapable of self-support because
of mental or physical defect.
The term "chief
support¨ means more
than one-half of the
requirements for
support. Thus, if two
children contribute
equal amounts for the
support of a parent,
neither one of them
may qualify as head
of the family.
s a taxpayer, a parent,
brother, or sister may
qualify for head of the
family, and is entitled to
the basic personal
exemption of P25,000,
but not entitled to
additional exemption.
c. Dependent
A dependent, for whom a head of
family or a married person may
claim an additional exemption
of P8,000.
1. is a legitimate,
illegitimate or legally adopted
child,
. chiefly dependent upon
and living with the taxpayer,
3. if such dependent is not
more than twenty-one years of
age,
4. unmarried and not
gainfully employed,
5. or if such dependent,
regardless of age, is incapable of
self-support because of mental or
physical defect¨
d. Single
individual,
widow/widower or
married individual
judicially decreed
as legally
separated with no
qualified
dependent has a
basic personal
exemption of
P,.
arginal ncome Earner -
refers to individuals:
1. not deriving
compensation as an
employee under an
employer-employee
relationship
. but who are self-
employed and deriving
gross sales/receipts not
exceeding P1, during
any 1-month period.
They shall file this return
reflecting herein the net
income from business.
hen to File
- The Returns of the taxpayers shall be
filed on or before the 15th day of April of
each year covering income for the
proceeding year.
- r. Robert de Castro
ndividual ncome Tax Return
December 31, 5
Gross Compensation ncome P 375,.
Less: Exemptions:
a. arried 5,
b. children 4x51, 15,.
Taxable ncome P 5,.
Tax Due
a. Basic Rate ,5.
b. Excess (5, - 14,)
85, x 5% 1,5.
Tax Due 43,75.
Less: Tax withheld 3,.
Tax refundable/payable 13,75.
If the tax withheld is equal to the tax due then there is no tax
refund or payable.
- r. Robert de Castro
ndividual ncome Tax Return
December 31, 5
Gross Compensation ncome P 375,.
Less: Exemptions:
a. arried 3,
b. children 4x8 3, 4,.
Taxable ncome P 311,.
Tax Due
a. Basic Rate 5,.
b. Excess (311, - 5,)
1, x 3% 18,3.
Tax Due 8,3.
Less: Tax withheld 11,.
Tax refundable (41,3.)
If the tax withheld is greater than the tax due, you have a
tax refund.
- r. Robert de Castro
ndividual ncome Tax Return
December 31, 5
Gross Compensation ncome P 375,.
Less: Exemptions:
a. arried 3,
b. children 4x8 3, 4,.
Taxable ncome P 311,.
Tax Due
a. Basic Rate 5,.
b. Excess (311, - 5,)
1, x 3% 18,3.
Tax Due 8,3.
Less: Tax withheld 59,.
Tax payable P 9,3.
If the tax withheId is Iesser than the tax due you are stiII IiabIe to
pay the remaining amount.
W r Erwin Red is a successful judo
instructor. He is legally separated with 7
children ages, 25,24,23,22,21,18,16.. He
earns an annual income of P501,275.00.
He lives with his mentally challenged
father. His tax withheld is P 75, 450.00
Solve for his income tax return.

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