CHAPTER 6 – ACTIVITY / ASSIGNMENT
1. Susan Dimagiba presented to you the following income for the year:
Basic salary
Withholding tax on basic salary
Directors Fee
Business income:
Retail business
Apartment rent (net)
Business expenses
Cash dividend:
From a domestic corporation
From a resident corporation
Stock dividend from a domestic corporation
Interest from savings deposit
Royalties from book publications
Prizes from contest won
PCSO winnings
13th month pay
Christmas bonus
Mid-year bonus
Damages received from injuries and sickness
Proceeds from the life insurance coverage of his
deceased father
P 900,000
300,000
200,000
250,000
190,000
125,000
50,000
50,000
25,000
20,000
50,000
50,000
50,000
100,000
30,000
50,000
85,000
300,000
Determine the following:
a. Gross income subject to graduated rate.
ANSWER: P 1,675,000
Solution:
Basic salary
Directors Fee
Business income:
Retail business
Apartment rent (net)
Cash Dividend:
From a Resident Corporation
13th month pay
Christmas Bonus
Mid-year Bonus
P 900,000
200,000
250,000
190,000
50,000
P1,590,000
P 100,000
25,000
50,000
P 175,000
(90,000)
P 85,000
b. Total final taxes on passive income
ANSWER: P 34,000
85,000
P1,675,000
Cash dividend:
From a domestic corporation (50,000*10%)
Interest from savings deposit (20,000*20%)
Royalties from book publications (50,000*10%)
Prizes from contest won (50,000*20%)
PCSO winnings (50,000*20%)
Total final taxes on passive income
P 5,000
4,000
5,000
10,000
10,000
P34,000
c. Total income not subject to tax
ANSWER: P 505,000
Stock dividend from a domestic corporation
Christmas Bonus ( De minimis )
13th month pay and other benefit P90,000 threshold
Damages received from injuries and sickness
Proceeds from the life insurance coverage of his
deceased father
Total income not subject to tax
P 25,000
5,000
90,000
85,000
300,000
P 505,000
d. Income tax due
ANSWER:
P 126,500
Basic salary
Directors Fee
Business income:
Retail business
Apartment rent (net)
Cash Dividend:
From a Resident Corporation
Excess of 13th month pay and other benefit
P 90,000 threshold
Taxable income
Income tax due
In first P 800,000
In excess of 800,000 (875,000*30%)
Less: Withholding Salary
Final taxes on Passive Income
Income Tax Due
P 900,000
200,000
250,000
190,000
50,000
P1,590,000
85,000
P1,675,000
P 130,000
262,500
P 392,500
(300,000)
P 92,500
34,000
P 126,500