Income Taxation Chapter 3 And 4

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Monetary burden imposed by the sovereignty on any good, service, or other benefit furnished or granted by an employer, in cash ot in kind, in addition to basic salaries, to an individual employee, other than a rank and file employee

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Fringe Benefit Tax

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A final withholding tax on the grossed-up monetary value of the fringe benefit granted by the employer to an employee who holds a managerial or supervisory position

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Fringe Benefit Tax

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Any goods, service or other benefit furnished or granted by an employer in cash or in kind, in addition to basic salaries to individual employees except rank and file employees

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Fringe Benefit

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Cover only those fringe benefits given or furnished to managerial or supervisory employees.

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FBT Tax Regulations (scope of FBT)

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Fringe benefits which are authorized and exempted from income tax under any special law such as:

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Contributions requires under SSS law

Contributions required under GSIS law

Similar contributions under existing law

Premium for group insurance of employees

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Other benefits under these regulations include:

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Christmas Bonus

Productivity incentive bonus

Loyalty awards

Gifts in cash or in kind and other benefits of similar nature

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It is received by the public officer or employer or employee of a private entity in addition to the regular compensation fixed for his position or office arr subject to income tax and consequently creditable withholding tax on compensation income

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Fixed or Variable allowances

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Granted under Section 34 of the General Act to certain officials of employees of the government are considered reimbursement for the expenses incurred in the performance of one's duties rather than as additional compensation

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Representation and Transportation Allowance

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Granted to employees are not subject to fringe benefit tax and tax on compensation on the basis that communication allowance is deemed necessary to business and redounds to the convenience and benefit

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Communication Allowance

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The value of the benefit representing the amount given or paid by the employer should also be the monetary value of the benefit

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Other Fringe Benefits

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May be taxable as fringe benefits or treated as compensation income depending on the nature of the expense account provided to employees

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Expense Account

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Expenses on connection with attending business meeting ir convention such as food, beverages, and transportation during foreign travel at an average 300 dollars per day arr considered reasonable expenses

Traveling expenses of family members of employees paid for by the employer shall be treated as taxable fringe benefit

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Expenses for foreign travel

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Owned and maintained by thr employer is not a taxable fringe benefit but treated as business expense of the employer

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Use of Aircraft and Helicopters

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Not later than the last day of the month following the close of the quarter during which withholding wad paid

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Filling of Returns

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There is no co-ownership when two or more heirs or beneficiaries inherit an undivided property from a decedent, or when a donor makes a gift of an undivided property in favor of two or more donees

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Co-ownership

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Is subject to Estate Tax

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Inheritance

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Both taxes are not income taxes but classified as Transfer Tax

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Estate Tax and Donor's Tax

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Remained undivided for more than 10 years and no attempt was ever made to divide the same among the co-heirs....

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Inherited property

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Is a mass of all property, rights, and obligations of a deceased person which are not extinguished by his death, including those which have accrued thereto since the opening of succession

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Estate

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Refers to the period when the title to their properties left by a decedent is not yet finally transferred to the heirs/beneficiaries

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Administration or Settlement Period

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The heirs or beneficiaries settle for themselves the distribution of the estate or their inheritance

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Extrajudicial settlement

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The taxable income of the estate is computed in the same as an individual taxpayer

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Applicable Tax

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Are the same items of deductions (business expenses) allowed for individual taxpayers under Section 34 of tax code

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Deduction from estate's gross income

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Where the heirs still do not divide the property but instead contribute to the estate money, property, or industry with intention to divide the profits between or among thenselves

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Termination of judicial/extrajudicial settlement

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A right on property, real, or personal, held by one party for the benefit of another

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Trust

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Person who establishes trust

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Trustor

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One in whom confidence is reposed as regards property for the benefit of another person

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Trustee

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Person for whose benefit trust is created

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Beneficiary

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Any person or corporation that holds in trust an estate of another person or persons.

may exist only if legal trust is created

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Fiduciary

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The income and corpus of the trust fo not revert to the grantor. The trust income is accumulated and held for distribution to the beneficiaries

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Ordinary Trust

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A trust where at any time, the power to revest in the grantor, title to any part of the corpus of the trust is vested

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Revocable Trust (Section 63-NIRC)

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Income tax shall not appl to employees' trust which forms part of pension, stock bonus, or profit-sharing plan of an employer for the benefit of some or all employees

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Employee's Trust