FAQ

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QUESTIONS FOR THE WEEK

Nov. 14, 2015

 

Here are some of the questions most commonly asked in the course of my practice as a professional accountant:

 NEW AMOUNT OF 13th MONTH PAY AND OTHER BENEFITS CEILING EXCLUDED FROM THE COMPUTATION OF GROSS INCOME

How much is the total amount of 13th month pay and other benefits excluded from the computation of gross income (Since December is fast approaching)?

Ans.  Revenue Regulation No. 3-2015 Sec. 2 provides that “ The amount of Thirty Thousand (P30,000), specifically referring to the total amount of 13th month pay and other benefits as one of the exclusions from gross compensation income received by an employee prescribed under the pertinent provisions, including the example computation of RR No. 2-98, as amended, is hereby increased to Eighty Two Thousand Pesos (P82,000.00).

 


QUESTIONS FOR THE WEEK

Oct. 27, 2015

Here are some of the questions most commonly asked in the course of my practice as a professional accountant:

COMPLETE  DOCUMENTARY REQUIREMENTS FOR ESTATE TAX TO PROCURE CERTIFICATE AUTHORIZING REGISTRATION

What are the documentary requirements in filing for an estate tax, and what is a Certificate Authorizing Registration (CAR)?

First, let us answer what is CAR.  It is a certificate of clearance issued by the BIR attesting that all taxes in connection to transfer or conveyance of property have been fully paid, and therefore ownership on said properties could now be processed and registered in the name of the new owner.

The following are the documentary requirements to comply with estate tax and to procure BIR clearance:

  1. Notice of Death duly received by the BIR, if gross estate exceeds P20,000 for deaths occurring on or after Jan. 1, 1998; or if the gross estate exceeds P3,000 for deaths occurring prior to January 1, 1998
  2. Certified true copy of the Death Certificate
  3. Deed of Extra-Judicial Settlement of the Estate, if the estate is settled extra judicially
  4. Court Orders/Decision, if the estate is settled judicially;
  5. Affidavit of Self-Adjudication and Sworn Declaration of all properties of the Estate
  6. A certified true copy of the schedule of partition of the estate and the order of the court approving the same, if applicable
  7. Certified true copy(ies) of the Transfer/Original/Condominium Certificate of Title(s) of real property(ies) (front and back pages), if applicable
  8. Certified true copy of the latest Tax Declaration of real properties at the time of death, if applicable
  9. “Certificate of No Improvement” issued by the Assessor’s Office declared properties have no declared improvement or Sworn Declaration/Affidavit of No Improvement by at least one (1) of the transferees
  10. Certificate of Deposit/Investment/Indebtedness owned by the decedent and the surviving spouse, if applicable
  11. Photo copy of Certificate of Registration of vehicles and other proofs showing the correct value of the same, if applicable
  12. Photo copy of certificate of stocks, if applicable
  13. Proof of valuation of shares of stocks at the time of death, if applicable
  • For listed stocks – newspaper clippings or certification from the Stock Exchange
  • For unlisted stocks – Audited Financial Statements duly certified by an independent certified public accountant with computation of fair market value per share at the time of death
  1. Proof of valuation of other types of personal property, if applicable
  2. Proof of claimed tax credit, if applicable
  3. CPA Statement on the itemized assets of the decedent, itemized deductions from gross estate and the amount due if the gross value of the estate exceeds two million pesos, if applicable
  4. Certification of Barangay Captain for claimed Family Home
  5. Duly notarized Promissory Note for “Claims against the Estate” arising from Contract of Loan
  6. Accounting of the proceeds of loan contracted within three (3) years prior to death of the decedent
  7. Proof of the claimed “Property Previously Taxed”
  8. Proof of claimed “Transfer for Public Use”
  9. Copy of Tax Debit Memo used as payment, if applicable

Additional requirements may be requested for presentation during audit of the tax case depending upon existing audit procedures.

 

 

 


 

QUESTIONS FOR THE WEEK

Oct. 22, 2015

 Here are some of the questions most commonly asked in the course of my practice as a professional accountant:

 

NON-STOCK AND/OR NON-PROFIT CORPORATIONS/ASSOCIATIONS/ORGANIZATIONS

What is a non-stock, non-profit corporation?

Answer: A non-stock corporation is a corporation that does not have owners represented by shares of stock.  Section 30 of the National Internal Revenue Code (NIRC) of 1997 provides that no part of its income is distributable as dividends to its members, trustees, or officers, and that any profit obtained as an incident to its operations shall, whenever necessary or proper, be used for the furtherance of the purpose or purposes for which the corporation was organized.

Non- profit means that no net income or asset accrues to or benefits any member or specific person, with all the net income or asset devoted to the institution’s purposes and all its activities conducted not for profit (RMC No. 51-2014).

So that if any amount of its accumulated savings are distributed to its employees or its officers and directors as a profit sharing, then this violates the nature of the corporation as a non-stock and non-profit organization.


QUESTIONS FOR THE WEEK

Oct. 9, 2015

Here are some of the questions most commonly asked in the course of my practice as a professional accountant:

 MARGINAL INCOME EARNER

  1. I have a small sari-sari store in our barangay with daily gross sales not exceeding P250. What are the tax requirements and exemptions applicable to me as owner of a small sari-sari store?

 Answer:  On the basis of the data you have presented, you are considered to be a Marginal Income Earner. If we compute your maximum gross sales for the year that is solely derived from a sari-sari store, your total sales would be P 91,250.  Sec. 3 of RR No. 7-2012 and RMC No. 7-2014 provides that, Marginal Income Earner (MIE) – shall refer to those individual whose business do not realize gross sales or receipts exceeding P100,000 in any 12-month period. The activities of such MIE should be principally for subsistence or livelihood.

The incidence of being a MIE as required under RR7-2012 covers the following privileges and minimum registration and tax compliance requirements:

  1. Registration with the Bureau using BIR Form 1901 with the following minimal documentary requirements:
  2. Sworn Statement of Income for the year (Annex “A”); and
  3. NSO Certified or Local Civil Registry Birth Certificate;
  4. Exemption from the payment of Annual Registration Fee (ARF);
  5. Registration of Books of Accounts (e.g. two-column journal or other simplified books of daily expenses and revenues);
  6. Issuance of registered principal receipts/sales invoices as prescribed under RMO 12-2013;
  7. Filing and Payment of Annual Income Tax Return using BIR Form 1701 similar to any other self-employed individuals; and
  8. Exemption from payment of business taxes (i.e. VAT or any Percentage Tax).

MINIMUM AMOUNT REQUIRED TO ISSUE OFFICIAL RECEIPTS OR INVOICES

2.  What minimum amount of each sales transaction that requires issuance of cash invoice or official receipts?

Under Sec. 237 of the National Internal Revenue Code, it provides that:  All persons subject to an internal revenue tax shall, for each sale and transfer of merchandise or for services rendered valued at Twenty-five pesos (P25.00) or more, issue duly registered receipts or sale or commercial invoices, prepared at least in duplicate, showing the date of transaction, quantity, unit cost and description of merchandise or nature of service.

 


 

QUESTIONS FOR THE WEEK

Oct. 2, 2015

Here are some of the questions most commonly asked in the course of my practice as a professional accountant:

SENIOR CITIZEN

1. I am a senior citizen and presently employed in a private company. I am earning a salary that is considered to be a minimum wage as declared by the Regional Tripartite Wage and Productivity Board (RTWPB) in our area.  As a bona-fide Senior Citizen card holder, am I required to file and pay for my income tax?

Answer:   As a general rule, Senior Citizens should file income tax returns and pay corresponding income tax due.  A Senior Citizen becomes exempt from paying income tax if he is a qualified minimum wage earner under RA No. 9504, just like what you have mentioned that you are considered to be one those as declared by the RTWPB in your area.  Senior Citizen is also exempt from income tax if the aggregate amount of gross income earned during the year does not exceed the total amount of his personal and additional exemptions.

2. I am a senior citizen and presently engaged in business. Being a Senior Citizen will this qualify me to be exempt to file and pay for my income tax?  Am I liable to pay VAT or Percentage Tax?

Answer:   Yes you are still required to file income tax, however you will be exempt from payment of income tax if the aggregate amount of your gross income during the taxable year does not exceed the amount of your personal exemption.  As self-employed or engaged in business,if your gross annual sales and/or receipts exceeds P1,919,500you are still subject to VAT.  Otherwise you will be subject to the 3% percentage tax.

 

 

 


 

QUESTIONS FOR THE WEEK

Sept. 25, 2015

Here are some of the questions most commonly asked in the course of my practice as a professional accountant:

 

OVERSEAS FILIPINO WORKER

  1. I am an Overseas Filipino Worker working in Dubai as a company branch manager engaged in the distribution of cosmetics and other beauty products.   While I am already paying my taxes in U.A.E., I am worried that I may be made to pay taxes in the Philippines for earning income from abroad since I have not filed any income tax return in the Philippines for the periods I was abroad.   Please enlighten me on this.   Thank you.

Answer: As an Overseas Filipino Worker, you are not required to file income tax return in the Philippines if your income is derived solely from abroad. In effect, you will not be made to pay taxes in the Philippines for that income earned from abroad.

Sec. 23 of National Internal Revenue Code of 1997 provides that:

(A) A citizen of the Philippines residing therein is taxable on all income derived from sources within and without the Philippines;

(B) A nonresident citizen is taxable only on income derived from sources within the Philippines;(note: underlines added)

(C) An individual citizen of the Philippines who is working and deriving income from abroad as an overseas contract worker is taxable only on income derived 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;

So therefore, if you earn income solely from abroad, you are not required to file income tax return and you will not be made to pay income tax in the Philippines.

 ESTATE TAX

  1. My mother died on September 1, 2015. She left four (4) commercial lots in  Cotabato City and a bank account deposit amounting to P 450,000. What are the tax requirements related to the said properties and bank deposit account? Since we would like to transfer the said properties in our name and distribute the bank account deposit among us her children.

Answer: First, you must notify the Revenue District Office of the BIR in writing, where your mother is registered as a taxpayer, within two (2) months from the time of her death.   The estate tax return should also be filed within six (6) months from the time of her death. There are corresponding penalties that the BIR will charge for late filing of notice of death and late filing of estate tax return.

You may visit the Revenue District Office of the BIR to get the checklist of documents that need to be submitted in order to comply the requirements for the transfer of properties in your names and distribute the cash in bank among you as brothers and sisters.

 

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