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Winnings:
Also subject to 20% final tax unless amounting to 10k or
less. 10k or less from PCSO/Lotto are exempt. So kung
nakadaog ka ug P10,001, subject to tax naka na 20%.
There shall be levied, assessed and collected on TRAIN LAW: Capital gains tax on sale, exchange or a) Stock in trade of the taxpayer or other property of
every sale, barter, exchange, or other disposition of disposition of shares not traded in the local stock a kind which would properly be included in the
shares of stock listed and traded through the local exchange is increased to a flat rate of 15%. inventory of the taxpayer if on hand at the close of
stock exchange other than the sale by a dealer in
securities, a tax at the rate of six-tenths of 1 percent Before TRAIN Law: So gina ensure na ang net the taxable year
[0.6 percent] of the gross selling price or gross value gains di mag-abot ng 100, 000, para di mag 10%.
in money of the shares of stock sold, bartered, Ginagawa ng tao, gina-buak-buak para di mulapas So in the orientation of real estate business, so part
exchanged or otherwise disposed which shall be ug 100,000.00 para 5% lang. sya of your inventory, so whatever kita of that, is
paid by the seller or transferor. NOW: Automatic 15% na sa NET GAIN, pag di sya part of your normal tax.
TRADED.
Under the Train Law:
b) Property held by the taxpayer primarily for sale to
So kung may benta ka sale of share of stock. customers in the Ordinary course of trade or
Capital gains from sale of shares of stock not traded Q: Is it an ordinary income in the ordinary course of
in the local stock exchange, a final tax of the rate of business? business
15% shall be imposed on a net capital gain, in A: If hindi, so its CAPITAL.
(1) In General. - The amount of interest paid or incurred TAX BENEFIT RULE
within a taxable year on indebtedness in connection with
(1) In General. - Taxes paid or incurred within the YEAR 1 YEAR 2
the taxpayer's profession, trade or business shall be
taxable year in connection with the taxpayer's
allowed as deduction from gross income: Provided,
profession, trade or business, shall be allowed as Income 100 110 (taxable)
however, That the taxpayer's otherwise allowable
deduction, except: (MEMORIZE) Local tax (50)
deduction for interest expense shall be reduced by forty-
two percent (42%) of the interest income subjected to final 50
a. The income tax provided for under this Title;
tax: Provided, That effective January 1, 2009, the
b. Income taxes imposed by authority of any You have gross income of 100, tapos nagbayad ka ng
percentage shall be thirty-three percent (33%). [29]
foreign country; but this deduction shall be local tax na 50, so 50 nalang. Tapos Year 2, nagkamali
allowed in the case of a taxpayer who does pala ng assess, so 40 lang pala dapat, nirefund ka ng 10,
(2) Exceptions. - No deduction shall be allowed in respect
not signify in his return his desire to have to that 10 would now be taxable. So that is the tax benefit
of interest under the succeeding subparagraph`s:
any extent the benefits of paragraph (3) of this rule. Kung maclaim mo siya as refund, you can consider it
subsection (relating to credits for taxes of as income to the extent that you considered it as
(a) If within the taxable year an individual taxpayer
foreign countries); deduction.
reporting income on the cash basis incurs an
c. Estate and donor's taxes; and
indebtedness on which an interest is paid in advance
d. Taxes assessed against local benefits of a Q: What if your income is 40? Tapos you paid taxes, 50,
through discount or otherwise (Eto yung nangutang ka ng
kind tending to increase the value of the so negative 10, tapos ngayon, you’ve got the refund of the
1000, ideduct na nila in advance ang interest): Provided,
property assessed. (Special Assessments) entire 50. So how much should you consider as taxable
That such interest shall be allowed as a deduction in the
year the indebtedness is paid: Provided, further, That if income in the next year? Is it the entire 50?
Provided, That taxes allowed under this Subsection,
the indebtedness is payable in periodic amortizations, the
when refunded or credited, shall be included as part of A: Following the tax benefit rule, since you only benefited
amount of interest which corresponds to the amount of the
gross income in the year of receipt to the extent of the 40, so what is considered as your taxable income is also
principal amortized or paid during the year shall be
income tax benefit of said deduction. (Tax Benefit Rule) only 40. Kasi kahit naman 50 to, negative 10 naman, so i
allowed as deduction in such taxable year;
only benefit the amount 40.
(2) Limitations on Deductions. - In the case of a If: 40
(b) If both the taxpayer and the person to whom the
nonresident alien individual engaged in trade or (50) *only benefitted 40
payment has been made or is to be made are persons
business in the Philippines and a resident foreign (10)
specified under Section 36 (B); or
Difference between depletion and depreciation? account but not
chargeable to property of a
Exploration means the searching or prospecting for
mineral resources by geological, geochemical or character which is subject to depreciation or
Depreciation is to spread or allocate the cost of a
geophysical surveys, remote sensing, test pitting, depletion (Sec 34 (I), NIRC).
tangible fixed asset over its estimated economic useful
trenching, drilling, shaft sinking, tunneling or any
life. In other words, it may be seen as a reduction in the
cost of a fixed asset due to normal usage, wear and tear, other means for the purpose of determining the
Period for amortizing the deferred research and
new technology, and other related reasons. existence, extent, quantity and quality thereof and
the feasibility of mining them for profit. (RA 7942) development expenditures
4. in an amount not in excess of: That is the only time that donations are deductible in ü Administrative expense must not exceed 30% of
full. Otherwise, it is subject to limitations.
the total expenses;
ü ten percent (10%) in the case of an individual,
Another examples deductible in full:
and
ü Upon dissolution, assets shall be transferred to
(b) Donations to Certain Foreign Institutions or
International Organizations. – donations to foreign another non-profit domestic corporation or to the
ü five percent (5%) in the case of a corporation, of institutions or international organizations which are State.
the taxpayer's taxable income derived from trade, fully deductible in pursuance of or in compliance
with agreements, treaties, or commitments entered
business or profession (Sec 34 (H), NIRC).
into by the Government of the Philippines and the
Ito yung kung magpepension, kung employer ka Wash sale - A sale of stock or securities where SPECIAL DEDUCTIONS
magko-contribute or magbabayad ka ng pension substantially identical securities are acquired or
plan, you have to consider the PAST SERVICE NOLCO
purchased within 61-day period, beginning 30 days
COST. (3) Net Operating Loss Carry-Over. - The net
before the sale and ending 30 days after the sale.
operating loss of the business or enterprise for any
Let’s say magbabayad ka ng pension ng taxable year immediately preceding the current
G.R.: Losses from wash sale are not deductible
employees, may mga empleyado ka jan na 40 years taxable year, which had not been previously offset
since these are considered as artificial loss.
in service, or 15 years in service, you have to as deduction from gross income shall be carried
compensate the services they rendered before. over as a deduction from gross income for the next
So I am paying for the CURRENT SERVICE COST XPN: When taxpayer is a dealer in securities, and
three (3) consecutive taxable years immediately
and PAST SERVICE COST. the transaction from which the loss resulted was
following the year of such loss: Provided, however,
made in the ordinary course of business of such
That any net loss incurred in a taxable year during
The past service cost, yung ang i-amortize for 10 dealer, the loss is deductible in full.
which the taxpayer was exempt from income tax
years.
shall not be allowed as a deduction under this
So ganito yun, meron kang 30 days and another 30
Subsection: Provided, further, That a net operating
Example: 10 years na sya sa akin, hindi ko lang days so 60 days, nagbenta ako security tapos
loss carry-over shall be allowed only if there has
naman binabayaran yung pension for this year but masyadong mababa ang binili sa akin kaya may
been no substantial change in the ownership of the
for the previous year. Kasi kung mag ko-compute ka loss. Tapos bigla, bumili ako ng same security that
business or enterprise in that -
ng retirement plan, consider the entire duration of time, I cannot deduct the losses. Kasi nga wash
his service, so yan ang tinatawag na PAST sales. Parang ginamit ko lang sya para makadeclare
(i) Not less than seventy-five percent (75%) in
SERVICE COST. ako ng loss, which is bumili rin naman ako ng same
nominal value of outstanding issued shares., if the
Deductible payment to pension trusts security within the 60 days.
business is in the name of a corporation, is held by
Then no deduction for the loss shall be allowed
Employer’s current liability – amount contributed under Section 34 unless the claim is made by a or on behalf of the same persons; or
(ii) Not less
during the taxable year shall be treated as an dealer in stock or securities and with respect to a than seventy-five percent (75%) of the paid up
transaction made in the ordinary course of the capital of the corporation, if the business is in the
ordinary and necessary expense
business of such dealer. name of a corporation, is held by or on behalf of the
Let’s say meron akong investment kay SN Prime, same persons.
Employer’s liability for past services – 1/10 of the binenta ko ngayon ang value nya 100, binenta ko at
reasonable amount paid to cover pension liability 50. So nalugi ako ng 50. Tapos maya maya bumili For purposes of this subsection, the term "not
applicable to the preceding 10 years
din ako ng same identical shares, same lang. The operating loss" shall mean the excess of allowable
50 loss that I get, I cannot deduct it kung bumili ako deduction over gross income of the business in a
within the 60 day period ng same identical shares.
Now deduction from individuals, diba nakalagay dun Xl. TAX ON INDIVIDUALS: BASES AND RATES
sa pambungad ng allowable deductions , “except for For Resident Citizens and Resident Aliens
an individual or any compensation income , these Sec. 24. Income Tax Rates.— (TRAIN LAW)
are the deductions.” Kung individual ka before, we
have what we called personal exemption , which is “(A) Rates of Income Tax on Individual Citizen and
an additional exemption. Dati ang personal Individual, Resident Alien of the Philippines.—
exemption kasi is depende sa status mo if married, “(1) An income tax is hereby imposed:
single, head of the family. Dati iba iba yung rates. “(a) On the taxable income defined in Section 31 of this
Example: Code, other than income subject to tax under
50,000 personal exemption, nung nagka anak ka,
Subsections (B), (C), and (D) of this Section, derived for “Tax Schedule Effective January 1, 2023 and onwards:
each taxable year from all sources within and without
may additional 25, 000 exemption, per anak not to the Philippines by every individual citizen of the
exceed four, so may motivation. Philippines residing therein;
Rationale of Personal Exemption: Itong 50,000 ito
yung na estimate nila to cover your personal “(b) On the taxable income defined in Section 31 of this
expenses. Kasi kung compensation earner ka lang, Code, other than income subject to tax under
di allowed ang other exemptions and allowed lang is Subsections (B), (C), and (D) of this Section, derived for
your personal exemptions to cover for your personal each taxable year from all sources within the
expenses tulad ng kain, bahay, the 50,000 dw is Philippines by an individual citizen of the Philippines
who is residing outside of the Philippines including
enough for a year, Imagine. So pag may anak ka,