Income Tax
Income Tax
Income Tax
Membership fees, assessment dues and other fees of Income tax System
similar nature of recreational clubs
only constitute contributions to and/or Global tax system
replenishment of the funds
for the maintenance and operations of the System employed where the tax system views
facilities offered by recreational clubs to their indifferently the tax base and generally
exclusive members. treats in common all categories of taxable
income of individual.
They represent funds held in trust by these clubs to
defray their operating and general costs and hence, only Schedular tax system
constitute infusion of capital.
System employed where the income tax
Case law provides that in order to constitute income, treatment varies and is made to depend on
there must be realized gain. the kind or category of taxable income of the
taxpayer.
Clearly, because of the nature of membership fees and
assessment dues as funds inherently dedicated for the Semi-schedular or semi-global tax system
maintenance, preservation and upkeep of the club’s
general operations and facilities, nothing is to be gained All compensation income, business or
from their collection. professional income, capital gain, passive
income, and other income not subject to final
But as to fees received by recreational clubs coming from tax are added together to arrive at the gross
their income-generating facilities, like bars, restaurants, income.
and food concessionaries, or from income-generating
activities like the renting out of sports equipment, After deducting the allowable deductions and
services and other accommodations. exemptions from the gross income, the
taxable income is subjected to one set of
In these latter examples, regardless of the purpose of the graduated tax rate for individual or normal
fees’ eventual use, gain is already realized from the corporation income tax rate for corporation.
moment they are collected because capital maintenance,
preservation, or upkeep is not their pre-determined
purpose. In our case:
Schedular = income taxation for individual income taxpayer
Global = income taxation for corporation
GROSS INCOME
Inclusions:
XPNS:
(4) Interests;
(5) Rents;
(6) Royalties;
(7) Dividends;
(8) Annuities;
but if such amounts are held by the insurer 1. Prizes and awards made primarily in recognition
under an agreement to pay interest thereon, of religious, charitable, scientific, educational,
the interest payments shall be included in gross artistic, literary, or civic achievement
income.
2. The recipient was selected without any action
(2) Amount Received by Insured as Return of Premium. on his part to enter the contest or proceeding;
– and
The amount received by the insured, as a return of 3. The recipient is not required to render
premiums paid by him under life insurance, endowment, substantial future services as a condition to
or annuity contracts, either during the term or at the receiving the prize or award.
maturity of the term mentioned in the contract or upon
surrender of the contract. (d) Prizes and Awards in sports Competition. –
(3) Gifts, Bequests, and Devises. – 1. All prizes and awards granted to athletes in local
and international sports competitions and
The value of property acquired by gift, bequest, devise, tournaments
or descent: Provided, however, 2. whether held in the Philippines or abroad and
That income from such property, as well as gift, 3. sanctioned by their national sports
bequest, devise or descent of income from any associations.
property, in cases of transfers of divided
interest, shall be included in gross income. (e) 13th Month Pay and Other Benefits. –
(4) Compensation for Injuries or Sickness. – Gross benefits received by officials and employees of
public and private entities: Provided, however, That the
(5) Income Exempt under Treaty. – total exclusion under this subparagraph shall not exceed
P90,000
Income of any kind, to the extent required by any treaty
obligation binding upon the Government of the (f) GSIS, SSS, Medicare and Other Contributions. –
Philippines.
GSIS, SSS, Medicare and Pag-Ibig contributions, and
(6) Retirement Benefits, Pensions, Gratuities, etc.- union dues of individuals.
Retirement under Labor Code, the retirement benefits (g) Gains from the Sale of Bonds, Debentures or other
are excluded. Certificate of Indebtedness. –
Retirement under a private retirement plan or Gains realized from the same or exchange or retirement
reasonable private benefit plan, the employer follows of bonds, debentures or other certificate of
the exclusion requirements under the NIRC: indebtedness with a maturity of more than five (5) years.
1. There is reasonable retirement benefit plan (h) Gains from Redemption of Shares in Mutual Fund. -
maintained by the employer and approved by
the BIR (i) Income Derived from the Sale of Gold
2. The retiring employee has been in the service
(1) The sale of gold to the Bangko Sentral ng
for at least 10 years
Pilipinas by registered small-scale miners,
3. Age requirement: not less than 50 years
(2) The sale of gold by registered small-scale
miners to accredited traders for eventual sale
to the Bangko Sentral ng Pilipinas