INCLUSIONS IN GROSS INCOME

[CARD-GRIP4]
INCLUSIONS
Compensation From ER-EE relationship; wages, separation pay, retirement, monetary benefits
₱82k++, Director’s fees when director is employed Fringe benefits to rank&file ₱82k++
Annuities Return of premium not taxable, excess over premium = taxable
Rents Rentals for lease of property, earnings from copyright, trademarks, patents & natural
resources; prepaid rentals taxable upon receipt; security dep when applied;
improvements to become property of lessor
Dividends (FC) Cash & prop dividends only, stock div & liquidating div – exempted
Gains form Ordinary asset, if capital asset – CGT of 6%
dealings in
Property
Royalties (outside Royalties outside PH only; active royalties – derived from active pursuit of the primary
PH) purpose of business
Interests Interest Inc from long-term dep not issued by banks, compound interest, usurious int
earned by loan sharks, unconscionable int inc, theoretical int inc
GI from Self-employment income, professional income – no ER-EE relationship, buss income
Profession, trade
or business
Prizes & Winnings Prizes from sources w/in PH do not exceed ₱10k, prizes derived outside PH, prizes &
(outside PH) winnings of corporations
Pensions SSS & GSIS pensions are EXEMPTED
Partner’s share in GPP not subj to Income Tax, it is the individual partners who shall be subj to I.T.
NI of GPP individually

EXCLUSIONS IN GROSS INCOME

[LAG-CRIM]
EXCLUSIONS Sec. 32 (B) of NIRC
Life Insurance Must be paid to heirs/beneficiaries by reason of death of insured
Amount of Return Amounts must be rece9ved as a return of premiums paid by him
Of Premium
Gifts, Bequests, Only donated property is excluded, income from the property shall be subj to
Devises Income Tax; there must be no legal obligation to give
Compensation for Indemnification received for death, injuries or damages suffered; Includes:
injuries/sickness amounts received thru accident/health insurance, workmen’s compensation,
actual damages received in a suit or agreement; exemplary damages = I.T.
Retirement Private Benefit Plan under R.A. 4917*, BIR-Approved Retirement Plan under R.A.
Benefits, pensions, 7641*, separation pay due to any cause beyond the control of employee, SSS &
gratuities GSIS benefits, benefits under law of US
Income exempt Tax treaty shall take precedence over local taxing statute
under treaty
Miscellaneous 13th month pay and other benefits up to ₱82k, passive income by foreign govts,
Items prizes and awards*, income derived by PH govt and its political subdivisions in
 the exercise of govt’l functions/public utility, mandatory contributions, gains
from redemption of shares in mutual funds, gains from investments with
maturity more than 5yrs
*R.A. 4917: a. Plan must be reasonable;

b. approved by the BIR;

c. must be in the service of same employer for at least 10yrs & must be at least 50yrs old;

d. should not have previously availed of retirement.

*R.A. 7641: 1. Retirement benefits stated in the CBA or other applicable contract;

2. Retirement benefits not under any agreement:

a. has served for at least 5 yrs;

b. 60-65yrs old;

*Prizes and awards: 1. Granted to athletes in sports competitions locally or abroad sanctioned by their
nat’l sports assoc;

2. Received in recognition of Charitable, Artistic, Religious, Civic, Educational,

Literary, or Scientific achievements; and was selected w/o any participation on his part

FRINGE BENEFITS
[RC, NRC, RA, NRA-ETB – 32%
NRA-ETB – 32%
Individuals employed by RHQ, OBU – 15%]
Housing
Expense Account
Vehicle
Household Exp
Interest on Loan
Membership Fees
Holiday &
Vacation Exp
Foreign Travel
Exp
Educational
Assistance
Insurance
Premium
.
DE MINIMIS BENEFITS
[exempt up to ₱82k]
 DEDUCTIONS FROM GROSS INCOME
[INDIVIDUALS]
Personal Exemption
Allowable Exemption
OSD
(Optional Standard Deduction)

DEDUCTIONS FROM GROSS INCOME

[CORPORATIONS]
Itemized Deduction
OSD