Income Tax 1-3

Front 1

Mode of raising revenues for public purposes

Exercise of the sovereign power to raise revenues for the expenses of the government

The act of laying a tax

Back 1

Taxation

Front 2

Three separate areas or aspects of taxation

Back 2

Levying or imposition of the tax

Assessment

Collection and payment

Front 3

Involves the passage of tax laws.

Back 3

Levying or imposition of tax

Front 4

Process of determining the correct amount of tax due

Back 4

Assessment

Front 5

Act of compliance with tax law by the taxpayer

Back 5

Collection and payment

Front 6

Power by which an independent state , through its lawmaking body , raises and accumulates revenue from its inhabitants to pay the necessary expenses of government

Back 6

The power to tax

Front 7

Power of a sovereign state to legislate for the protection of health , general welfare , safety and morals of the public

Involves the power to regulate both liberty and property for the promotion of the public good

Back 7

Police power

Front 8

Inherent power of a sovereign state to take private property for a public purpose

Back 8

Power of eminent domain

Front 9

Types of due process

Back 9

Substantive due process

Procedural due process

Front 10

Guarantees that a law shall not be unreasonable , arbitrary , or capricious , and that the means selected shall have a reasonable and substantial relation to the object being sought

Back 10

Substantive due process

Front 11

Guarantees fairness in the enforcement of laws which affect deprivation

Essential elements:

Notice

Opportunity to be heard and to defend and an orderly proceeding adapted to the nature of the case

Back 11

Procedural due process

Front 12

Means that the same class of persons are properties falling under the same circumstances should be taxed the same kind and rate of tax

Back 12

Uniformity

Front 13

Requires no more than the same means and methods be applied in partially to all the constituents of each class

Back 13

Equality

Front 14

For a government entity to be taxable , the following must concur:

Back 14

1. It must not be performing an essential government function.

2. It must be engaged in a similar business , industry , or activity as performed by other taxable corporations.

Front 15

This principle limits the authority of the government to effectively impose taxes on a sovereign state and its instrumentalities , as well as on its property held and activities undertaken in that capacity .

Back 15

International comity

Front 16

Taxing the same person twice by the same jurisdiction for the same thing or purpose

Back 16

Double taxation

Front 17

Means that the sources of revenue should be sufficient to meet the demands of public expenditures

Back 17

Fiscal adequacy

Front 18

Means that the tax imposed should be a proportionate to the taxpayer's ability to pay

Back 18

Equality or theoretical justice

Front 19

Tax laws should be capable of convenient , just and effective administration

Back 19

Administrative feasibility

Front 20

Theory that states "without taxes, no government can function"

Back 20

Life-blood theory

Front 21

According to this theory , the steep demands and refused access from the subjects of the station within its jurisdiction so that it may be enabled to carry its mandate into effect and perform the functions of government . The citizen base from his property the portion demanded in order that he may be secured in the enjoyment of the benefits of the organized society .

Back 21

Benefits protection theory (symbiotic relationship)

Front 22

Enforced proportional contribution from persons and property , levied by the state , by virtue of sovereignty , for the support of government and for all public needs

Back 22

Tax

Front 23

Enforced , proportional , pecuniary contribution , from persons and property within the taxing jurisdiction , to raise revenue for the support of the government and for its public needs

Back 23

Tax

Front 24

Essential elements or characteristics of a tax

Back 24

1 . Enforced contribution

2 . Exactly pursuant to legislative authority

3 . For raising revenue for public needs

4 . Proportionate in character or uniform

5 . Payable in money

6 . Imposed within the states jurisdiction

7 . Personal to the taxpayer

Front 25

Scope of legislative in tax

Back 25

Subject

Amount

Purpose

Method of collection

Apportionment

Kind of tax to be collected

Situs

Hint 25

SAPMAKS

Front 26

Canons of a tax

Back 26

1 . Proportional to one's ability to pay

2 . Certain and not arbitrary

3 . Convenient to pay

4 . Economical to collect

Front 27

Levied and collected by the national government .

It is enforced throughout the country .

Back 27

National tax

Front 28

Imposed and collected by local governments .

Back 28

Municipal or local tax

Front 29

Fixed amount imposed upon persons , or upon persons of a certain class , residing within the jurisdiction of the taxing authority , without regard to their property or occupation or business in which they may be engaged .

Back 29

Personal , capitation , or poll tax

Front 30

Tax is imposed on property

Back 30

Property tax

Front 31

Tax upon the performance of an act , or the exercise of a right or privilege

Back 31

Excise tax

Front 32

Where the liability for the tax and the burden of the tax falls on the same taxpayer .

Back 32

Direct tax

Front 33

Where the liability for the tax falls on the original taxpayer but the burden thereof is shifted to another person .

Back 33

Indirect tax

Front 34

Tax is levied without a specific or predetermined purpose .

Back 34

General or revenue tax

Front 35

Tax is imposed for a special purpose .

Back 35

Special tax

Hint 35

Protective tariffs

Front 36

Tax is based on a fixed percentage of the property or amount of income or receipt .

Back 36

Proportional

Front 37

Tax rate increases as the tax base increases

Back 37

Progressive

Front 38

Rate of tax decreases as the tax base increases .

There are no such taxes in the Philippines .

Back 38

Regressive

Front 39

Tax is a fixed amount measured by the head or the number , or by some standard of weight or measurement , and requires no assessment are there then a listing or classification of the subjects to be taxed .

Back 39

Specific

Front 40

Tax is a fixed proportion of the value of the property with respect to which the tax is assessed , and requires the intervention of assessors or appraisers in certain cases .

Back 40

Ad valorem

Front 41

Forms of escape from taxation

Back 41

1 . Shifting the burden of the tax

2 . Capitalization

3 . Transformation

4 . Tax exemption5

5 . Tax avoidance

6 . Tax evasion

Front 42

Transferring the burden of the tax from the statutory taxpayer to another without violating the tax law

Back 42

Shifting the burden of the tax

Front 43

By not selling property which has increased in value , the owner avoids the income tax to be paid on the gain if the same is sold .

Back 43

Capitalization

Front 44

Recoup the tax paid by making his production more efficient and lowering his cost of production .

Back 44

Transformation

Front 45

Freedom from the burden of paying tax

Back 45

Tax exemption

Front 46

Occurs when the means used to minimize taxes are legal and not prohibited by law

Back 46

Tax avoidance

Front 47

Connotes fraud through the use of pretenses and forbidden devices to lessen or defeat taxes .

Back 47

Tax evasion

Front 48

An exercise of the police power to guard and safeguard the interest and welfare of the public

Back 48

Licensing

Front 49

In the nature of a tax upon property levied according to benefits conferred upon the property .

Back 49

Special assessment

Front 50

System involving assessment , collection , and enforcement of taxes including the execution of judgment in all tax cases decided in favor of the bureau of internal revenue

Back 50

Tax administration

Front 51

Chief officials of the bureau of internal revenue

Back 51

One chief: commissioner of internal revenue

Four assistant chiefs: deputy commissioners

Front 52

Commissioner shall have the authority to terminate the taxable period of a taxpayer and to request the immediate payment of the tax when:

Back 52

The taxpayer:

1. is retiring from the business subject to tax

2 . Is intending to leave the Philippines , to remove property therefrom , or to hide or conceal property

3 . Is performing any act tending to obstruct the collection of the tax

Front 53

Commissioner may prescribe a minimum amount of gross receipts , sales , and taxable base when:

Back 53

1 . It is found that a taxpayer has failed to issue receipts or invoices

2 . There is a reason to believe that the books of accounts or other records do not correctly reflect the declarations made in the return .

Front 54

Commissioner may , at any time during the taxable year:

Back 54

1. Order inventory taking of goods of the taxpayer

2 . Place the business operations of the person under observation or surveillance

Front 55

Characteristics of taxation

Back 55

Comprehensive

Unlimited

Plenary

Supreme

Hint 55

CUPS

Front 56

The lapsing of a right due to the passage of time.

When one sleeps on his right over an unreasonable period of time , he is presumed to be waving his right .

Back 56

Imprescriptibility (prescription)

Front 57

Acts as contact point for the competent authorities of treaty partners for exchange of information purposes

Back 57

Competent authority

Front 58

Covers any information necessary or relevant to the administration or enforcement of the domestic tax laws of the contracting parties .

Back 58

Exchange of information

Front 59

Informations that the requesting party would not be able to obtain under similar circumstances under its own law or administrative practices:

Back 59

1 . Information requested would not be able to obtain under similar circumstances under its own law or administrative practices

2. Relating to years not covered by a DTA , or to taxes not covered therein

3 . Disclosure of information requested would be contrary to public policy

4 . Information discriminates against a national of the requested party as compared with a national of the applicant party in the same circumstances

5 . Information is subject to legal privileges

Front 60

One levied on the income from property or an occupation .

It is a direct tax upon the thing called income.

Back 60

Income tax

Front 61

Purpose of income tax

Back 61

1 . to raise revenue to defray expenses of the government

2 . to mitigate the evils arising from the inequalities of wealth by progressive scheme of taxation which places the burden on those best able to pay .

Front 62

Basis in imposing income tax

Back 62

Benefits received theory

Ability to pay theory

Front 63

Payment of taxes is based upon the benefits received from public services

Back 63

Benefits received theory

Front 64

Support of the government should be provided by the taxpayers based on the relative ability to share in the tax burden

Back 64

Ability to pay theory

Front 65

Characteristics of philippine income tax

Back 65

1 . A national tax

2 . A general tax

3 . An excise tax

4 . A direct tax

5 . A progressive tax

6 . The income tax system is a comprehensive system

7 . Semi global or semi scheduler system

Front 66

Taxable income are compounded or group together without distinction , and after deducting expenses and other allowable deductions therefrom , are then subjected to graduated tax rates

Back 66

Global tax system

Front 67

Not subject to such a graduated tax rates . Such income are classified into different categories and are accorded different tax treatments . Each category of income has its own schedule of tax rates .

Back 67

Schedular tax system

Front 68

All wealth which flows into the taxpayer other than a mere return of capital .

Back 68

Income

Front 69

Like a fruit which cannot be enjoyed or used unless everdure plucked from the tree , so is income not taxable unless separated or severed from the capital or labor that bore it . This theory is known as:

Back 69

Theory of separability or severance

Front 70

Under this doctrine , in order that income exists , it is necessary that there be a separation from capital of something of exchangeable value .

Back 70

Doctrine of severance test

Front 71

Requisites for taxability of income

Back 71

1 . There must be a gain or profit whether in cash or its equivalent

2 . The gain must be realized or received

3 . The gain must not be excluded by law or international treaty from taxation

Front 72

The first cause , or that which gives rise to anything , or the origin

Back 72

Source

Front 73

The place of taxation of the income or the country which has jurisdiction to impose the tax

Back 73

Situs

Front 74

Whereby a final tax is imposed on the gross amount of specified types of income

Back 74

Gross income taxation

Hint 74

Also known as the schedular system of taxation

Front 75

Whereby certain deductions are allowed and subtracted from the aggregate of income is not subject to final tax , and the tax computed is based on the resulting net income therefrom

Back 75

Net income taxation

Hint 75

Also known as the global system of taxation

Front 76

Types of taxable income

Back 76

1 . Ordinary income

2 . Passive income

3 . Capital gains

Front 77

Earned or arises out of an employer-employee relationship

Back 77

Compensation income

Front 78

Derived from professional services like medical and legal services

Back 78

Professional income

Front 79

Obtained from profits and engaged in trade or business

Back 79

Business income

Front 80

And without any action on the part of the taxpayer . Taxpayer merely waits for the income to be received or realized .

Back 80

Passive income

Front 81

Gains from selling capital assets

Back 81

Capital gains

Front 82

Types of ordinary income

Back 82

Compensation income

Professional income

Business income

Hint 82

CPB

Front 83

Any person subject to income tax imposed by title ii of the tax code

Back 83

Taxpayer

Front 84

An individual , trust , estate , or corporation

Back 84

Person

Front 85

Classification of taxpayers

Back 85

Individuals

Corporations

Partnerships

Estates and trusts

Front 86

Citizen of the philippines residing therein is taxable on all income derived from sources within and without the philippines

Back 86

Resident citizen

Front 87

Taxable only on income derived from sources within the philippines

Back 87

Non resident citizen

Front 88

An individual citizen of the philippines who is working and deriving income from abroad as an overseas contract worker is taxable only on income from sources within the philippines

Back 88

Overseas contract worker

Front 89

An alien in the middle residing in the philippines is taxable only on income derived from sources within the philippines

Back 89

Resident alien

Front 90

An alien individual , whether a resident or not of the philippines , is taxable only on income from sources within the philippines

Back 90

Non resident alien engaged/ not engaged in trade or business within philippines

Front 91

Those working in private and public sectors and who are paid the statutory minimum wage as determined by the tripartite minimum wage board.

Exempt from payment of the income tax based on their statutory minimum wage rates .

Back 91

Minimum wage earners

Front 92

Domestic corporation

Back 92

Taxable on all income derived from sources within and without the philippines

Front 93

Resident foreign corporation

Back 93

Engaged in trade or business in the philippines is taxable only on income derived from sources within the philippines

Front 94

Non-resident foreign corporation

Back 94

Not engaged in trade or business in the philippines is taxable only on income derived from sources within the philippines

Front 95

Partnership formed by persons for the sole purpose of exercising their common profession

Back 95

General professional partnership

Front 96

Formed for the purpose of undertaking construction projects or ingredient and petroleum , coal , etc under a service contract with the government

Back 96

Joint ventures or consortia

Front 97

Trusts are classified into:

Back 97

Ordinary trust

Revocable trust

Irrevocable trust

Employee's trust

Hint 97

ORIE

Front 98

Ordinary income and other income not subject to final tax

Back 98

Returnable income