Module 7 - Tax Exercises

Economics 9 4th Quarter
MODULE
Personal Income Tax
7
Instructions: Compute the income taxes in the following situations.
1. Resident alien husband and wife with two dependent children.
 Salary and allowances of husband arising from employment: Salary of PHP 652,000, living allowances of PHP 100,000,
and housing benefits (100%) of PHP 300,000.
 Teaching salary of wife: PHP 68,000.
 Gross dividend income from investment in shares of stock of a domestic corporation of PHP 10,000.
 Interest of PHP 20,000 on peso bank account.
 Capital gain on sale of shares of PHP 5,000.
 Taxes withheld by employer of husband at PHP 118,000 and by employer of wife at nil.
 Husband is occupying a managerial position in the company.
2. The employee’s daily taxable earnings for the payroll period is P2,500.00. The non-taxable deductions, for instance, would be
SSS (P90.80), Philhealth (P68.75), and HDMF (P100.00). How much will he pay for daily withholding tax?
P 2, 500
- 2, 192. 00
___________
308 x 30% = 92.4 + 366.16 == 458. 56
3. Donald’s weekly taxable earnings for the payroll period is P10,000.00. The non-taxable deductions would amount to the
following: SSS (P363.30), Philhealth (P125.00), and HDMF (P100.00). Hence, the total for non-taxable deductions will be P588.30.
Calculate his weekly withholding tax.
P 10, 000
- 7, 692
________
2, 308 x 25% = 577 + 576. 92 = 1, 153. 92
4. In 2010, Juliet Ulbod earned P500,000.00 as income from her beauty parlor and received P250,000.00 as Christmas gift from her
spinster aunt. She had no other receipts for the year. She spent P150,000.00 for the operation of her beauty parlor. For tax purposes,
her gross income for 2010 is?
P 500, 000
150, 000
________
350, 000
- 250, 000
_________
100, 000 x 8% = 8, 000
5. Calculate the monthly withholding tax of Julius as his taxable income is 45,300 per month.
P 45, 300
33, 333
__________
11, 967 x 25 % == 2, 991. 75 + 2, 500 == 5, 491.75
6. If Atty. Weng is earning 289, 000 per month in her private firm. How much is her professional tax yearly if the mandatory
contribution deducted from her income is 3,200 pesos only?
P 289, 000
- 3, 200
__________
285, 800 x 12 = 3, 429, 600 taxable income yearly..
7. Nichole is calculating her yearly withholding tax with her taxable income of 76,000 pesos per month. How much would be her
yearly withholding tax?
76, 00
- 66, 667
_______
9, 333 x 30% = 2, 799.9 + 10, 833 == 13, 632. 9 x 12 = 163, 594.8
Answer the following questions thoroughly.
1. Instances where the income of minimum wage earners is exempted from income tax.
- Statutory Minimum Wage (standard salary per day)
- Holiday pay, overtime pay, night shift differential pay and hazard pay earned by the aforementioned MWE shall likewise be
covered by the above exemption.
2. What are the examples of fringe benefits?
Any good, service or other benefit furnished or granted in cash or in kind by an employer to an individual employee (except rank
and file employees) such as, but not limited to, the following:
a. Housing;
b. Expense account;
c. Vehicle of any kind;
d. Household personnel, such as maid, driver and others;
e. Interest on loan at less than market rate to the extent of the difference between the market rate and actual rate granted;
f. Membership fees, dues and other expenses borne by the employer for the employee in social and athletic clubs or other
similar organizations;
g. Expenses for foreign travel;
h. Holiday and vacation expenses;
i. Educational assistance to the employee or his dependents; and
j. Life or health insurance and other non-life insurance premiums or similar amounts in excess of what the law allows.
3. What are general principles of income taxation?
Except when otherwise provided in the NIRC:
1. A citizen of the Philippines residing therein is taxable on all income derived from sources within and without the
Philippines;
2. A nonresident citizen is taxable only on income derived from sources within the Philippines;
3. An individual citizen of the Philippines who is working and deriving income from abroad as an overseas contract
worker is taxable only on income from sources within the Philippines: Provided, that a seaman who is a citizen of the
Philippines and who receives compensation for services rendered abroad as a member of the complement of a vessel
engaged exclusively in international trade shall be treated as an overseas contract worker;
4. An alien individual, whether a resident or not of the Philippines, is taxable only on income derived from sources within
the Philippines;
5. A domestic corporation is taxable on all income derived from sources within and without the Philippines; and,
6. A foreign corporation, whether engaged or not in trade or business in the Philippines, is taxable only on income
derived from sources within the Philippines.
4. Definition of “taxable period”.
“Taxable period” means the calendar year, or the fiscal year ending during such calendar year, upon the basis of which the net
income is computed. DECEMBER- JANUARY
5. Are 13th month pay and Christmas bonus will be considered as taxable income? Why or why not?
They are not included under taxable income.
6. What are the criteria in imposing Philippine income tax?
1. Citizenship Principle – A citizen of the Philippines residing in the Philippines is taxable on all income derived from sources
within and without the Philippines while a nonresident citizen is taxable only on income derived from sources within the
Philippines;
2. Residence Principle – All income derived by persons residing in the Philippines, whether citizens or aliens, whether domestic or
foreign corporations, shall be subject to income tax on the income derived from sources within the Philippines.
3. Source principle – All income derived from sources within the Philippines shall be subject to income tax.
7. What is Taxation? Differentiate this from the power of Eminent Domain and Police Power.

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Economics 9 4th Quarter

2. What are the examples of fringe benefits?

3. What are general principles of income taxation?

Except when otherwise provided in the NIRC:

4. Definition of “taxable period”.

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