Taxation Law Review Etfgfhfjgk

8/20/2019 Taxation Law Review Etfgfhfjgk

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Taxation Law Review

NOLCO Rule:

Any capital loss

sustained by thetaxpayer during a

taxable year shall be treated in

thesucceedingtaxable year as a



loss from sale or

exchange of capital

asset held for not

morethan !months"

Re#uisiteso

Amount of loss

should not exceed



net income for the

taxable year when

the loss

wasincurred"o

There should be

capital gain fromwhich the carried

over loss can bededucted



o

Can only be availed by individuals$

%" &A'N( AN%

LO(()( *RO+

(,ORT (AL)(

(hort (ale isdefined as a sale

where the seller isselling a property



without distinction

of what -indof

property he is

selling. whether ashare of stoc- or

not" The seller isselling property

which he is notin

his possession" Any



gains or losses are

considered as

capital gains or

losses")" CA/'TAL TO

OR%'NAR0A(()T. 1'C)

1)R(A

Calasan2 1 C'R



A conversion from

capital to ordinary

asset is allowed

provided that it is:o

'n furtherance of

the taxpayer3s business

o



(ubstantially

improved or very

actively sold or

both"RR 45!667

/roperties

classified asordinary assets are

automaticallyconverted into



capital assets

uponshowing of

proof that the same

have not been usedin business for

more than ! years prior tothe

consummation of

the taxable



transactions

involving said

properties"

1'" TA8 ON'N%'1'%9AL(

The RC is the onlyindividual taxpayer

who is liable for

income derived



from all sources.

within andwithout

the /hilippines"

A" R)('%)NTC'T')N. NON5

R)('%)NTC'T')N. OC;

AN% ()A+)N



AN% R)('%)NT

AL')N

"Net 'ncome

Taxa"%efined asthe pertinent items

of gross incomeless deductions

and<or personal

andadditional



exemptions"b"This

is the only -ind of

income tax which

admits ofdeductions.

personalandadditional

exemptions"c"+arri

ed individuals shall



compute separately

their individual

income tax"

,owever.this isapplicable only for

individuals earning purely

compensation

income"d"+arried



individuals who do

not derive income

purely from

compensation. shallfile aconsolidated

return to includeincome of both

spouses. except

where it



isimpracticable"e"R

A =>6? exempts

minimum wage

earners from the payment of net

income tax" /repared by: +ichael &ines

+unsayac

Taxation Law Review



!"*inal 'ncome

Tax @ for /assive

incomea"'nterest.

Royalties. /ri2esand other

;inningi"Applica ble tax is

!6Bii"/assive

income should be



derived from

sources within the

/hilippinesiii"*C%

9 deposits apply4">Biv"Long Term

deposits orinvestments

exempt from final

tax



? to D > years >B

7 to D ? years

!B

D 7 years !6B*or

pri2es. before tax is

imposed:



+ust be derived

from sources within

the /hils"

+ust be E/6-

+ust be pursuant to

a promotion or

contest/ri2es

exempted from tax:



Received primarily

in recognition of

religious.

charitable.scientific.

educational.artistic.literary. or civic

achievement



The recipient was

selected without

any action on his

part to enter thecontest

or proceeding

The recipient is not

re#uired to rendersubstantial future



services as a

condition

toreceiving the

pri2e oraward";innings are

subFect to *;,T of !6B including

winnings pursuant

to gambling



@except/C(O"b"Ca

sh and<or /roperty

%ividendsi"Only

cash and propertydividends are

subFect to 6Bfinal income

taxii"(toc-

dividends are not



taxable since such

dividends are only

a transfer of

thesurplus profitfrom the retained

earnings to theauthori2ed capital

stoc-"iii"(hare of an

individual in the



distributable net

income after tax of

a partnershipof

which he is a partner is subFect to

final incometaxc"Capital &ains

from (ale of

(hares of (toc- not



Traded in the (toc-

)xchangei"The net

capital gains from

sale. barter.exchange or other

dispositionof shares of stoc-

in a domestic

corporation not



listed and traded is

subFect to afinal tax

rate of >B for the

first /66- of thenet capital gainG

and 6B of thenetcapital gain of any

amount in E

/66-"ii")lements



re#uired"(hares

must be shares in a

domestic

corporation"!"(har es are capital

assets"7"The sharesare not listed and

traded in the local

bourse"iii"*or listed



shares. the gains

are not subFect to

income tax but

subFect toabusiness tax

@percentage tax atthe rate of H of B

of the gross selling

price"d"Capital



&ains from (ale of

Real /ropertyi"A

final income tax of

IB based on thegross selling price

or *+1. whichever ishigher shall be

imposed on C&

provided:"the



property sold is

real

property!"located

in the /hilippines /repared by: +ichael &ines

+unsayac

Taxation Law Review

7"classified as a

capital assetii"(aleof a natural



person3s principal

residence maybe

exempted from

paymentof the IBC&T when the

proceeds of the saleare fully utili2ed in

ac#uiring

or constructing a



new principal

residence within J

months from the

date of notari2ationof the %eed of

(ale"iii"(ale ofmortgaged

property taxable

only if the buyer is



other than a

financialinstitution"

K" NON

R)('%)NT AL')N)N&A&)% 'N

TRA%) O*K9('N)(( 'N T,)

/,'L'//'N)(



" N e t ' n c o m e

T a x

An NRA )TK is

subFect to the net

income tax"

Liable only for

income derived

from sources withinthe /hils"! " * i n a l



' n c o m e

T a x a"Cash and<or

property dividends

or share in thedistributable net

income ofapartnership @not

general

partnership.



'nterests. Royalties

and Other

winnings"

!6B final income

tax levied on letter

a"

*or pri2es less than

/6-. theapplicable tax is the



net income

tax"/ri2es from

/C(O and Lotto

are exempt fromincome tax"

Royalties forliterary wor-

subFect to tax rateof only 6B"



'nterest income

from LT deposits

and investments are

exempt frofinalincome

tax"b"Capital&ains

(ame as RA )TK inthe /hils"



C" NON

R)('%)NT

AL')N( NOT

)N&A&)% 'NTRA%) OR

K9('N)(( 'N T,)/,'L("

" Net 'ncome Tax



NRA N)TK shall

be liable for the

entire income he

received from allsourceswithin the

/hilippines by wayof the gross income

tax"



Tax rate is !>B on

gross income!"

*inal 'ncome Tax

(ale of shares of

stoc- or sale of real

property which arecapital assets. use

taxrate in the nextsection which is



>B final income

tax"

%" AL')N(

)+/LO0)% K0+NC(. OK9(

AN%/)TR)OL)9+

()R1'C)

CONTRACTOR(



" 'ncome Tax

Liability for

(alaries and

Compensation

These alien

individuals areliable for final

income tax at a rate



of >B on

their gross income

(ame tax treatment

is applicable to

*ilipinos employed

and occupying thesameposition as the

aliens employedtherein"



The >B final

income tax does not

apply R*

employees bothaliens

and*ilipinos"!"'ncome Tax

Liability for Other

'ncome



%epends upon the

taxpayer3s

classification or

status" /repared by: +ichael &ines

+unsayac

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Taxation Law Review Etfgfhfjgk

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