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    Vergara, Gian Bianca F. BSAT-4A Recitation: Compensation Income

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    lena cpa
    The document contains 4 practice problems related to Philippine taxation of compensation and business income. The problems provide income amounts and ask the test taker to calculate tax liability. They address scenarios such as mixed compensation and business income, opting for the 8% tax rate, and credits for withholding taxes paid.

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    Vergara, Gian Bianca F. BSAT-4A Recitation: Compensation Income

    Uploaded by

    lena cpa
    515 views4 pages
    The document contains 4 practice problems related to Philippine taxation of compensation and business income. The problems provide income amounts and ask the test taker to calculate tax liability. They address scenarios such as mixed compensation and business income, opting for the 8% tax rate, and credits for withholding taxes paid.

    Original Title

    Gian-Vergara-Recitation_-Compensation-Income-final

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    The document contains 4 practice problems related to Philippine taxation of compensation and business income. The problems provide income amounts and ask the test taker to calculate tax liability. They address scenarios such as mixed compensation and business income, opting for the 8% tax rate, and credits for withholding taxes paid.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    515 views4 pages

    Vergara, Gian Bianca F. BSAT-4A Recitation: Compensation Income

    Uploaded by

    lena cpa
    The document contains 4 practice problems related to Philippine taxation of compensation and business income. The problems provide income amounts and ask the test taker to calculate tax liability. They address scenarios such as mixed compensation and business income, opting for the 8% tax rate, and credits for withholding taxes paid.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 4

    Vergara, Gian Bianca F.

    BSAT- 4A Recitation: Compensation Income

    Post-Test:

    1. Pedro is a resident citizen, earning purely compensation income as follows for


    2018 taxable year.

    A.200,000

    B. P250,000

    C. 800,000

    D.P2,800,000

    Answer:

    a. Exempt

    b. Exempt

    c. Income Tax Due = P130,000

    d. P746,000 computed as follows:

    Tax Due:

    1st P2,000,000 P490,000

    Excess over P2M = (P800,000 x 32%) 256,000

    Total P746,000

    P215000 2. Juan is a resident citizen, earning purely business income for 2018
    taxable year:

    Gross Sales P2,800,000

    Cost of Sales 1,200,000

    Operating expenses 650,000

    Rental Income (net of CWT) 380,000

    Other creditable withholding taxes 80,000


    Solution:

    Gross sales P2,800,000

    Gross rental income (380000/95%) 400,000

    Less: Cost of sales 1,200,000

    Operating expenses 6500,000 (1,850,000)

    Taxable net income P1,350,000

    Less: 800,000

    Excess over 1,350,000 550,000

    Multiply by tax rate-4th bracket 30%

    Excess over 800,000 165,000

    BIR’s Graduated tax table- 4th bracket 130,000

    Income Tax Due 295,000

    Less: Creditable withholding tax 80,000

    Income Tax Payable P215,000

    Not applicable 3. Use the same data in #2 but assume that Juan opted to be taxed
    using 8% income tax rate.

    Solution:

    Gross sales P2,800,000

    Gross rental income(380,000/95%) 400,000

    Total P3,200,000

    In this case, the tax rate of 8% cannot be applied. Because Juan aggregated
    the amount of P3,200,000 as his total gross sales where the VAT threshold
    of P3,000,000. Therefore, he is subject to Value added tax (VAT).
    P212,000 4. Lorna is a resident citizen, earning compensation and business
    income for 2018 as follows:

    Compensation income P1,400,000

    Gross Sales 2,800,000

    Cost of Sales 1,200,000

    Operating expenses 650,000

    Withholding tax on compensation income 310,000

    Other Creditable withholding taxes 80,000

    Solution:

    Compensation income P1,400,000

    Gross sales 2,800,000

    Cost of sales (1,200,000)

    Operating expenses (650,000)

    Taxable net income P2,350,000

    Tax Due:

    1st P2,000,000 P490,000

    Excess over P2M = (P350,000 x 32%) 112,000

    Tax Due P602,000

    Less: CWT

    On compensation income (310,000)


    On business income (80,000)

    Income Tax Payable P212,000

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