unit 12 session 12

8/3/2019 Unit 12 Session 12

1/22

UNIT 12

TAXATIONSession 12


2/22

RequiredRequired

Calculat e the cap ital ga ins a nd

losses for a n individ ual a ndcom pa ny, toge ther wi th re lev a n t allow a nces


3/22

To p ics

Review of L a s t session

Tes t of b a se line know ledgeL a yout of com putat ionA llowa b le Ex pendi tu re

Index at ion allowa nce a nd tap er re lief De al ing wi th lossesA llowa nces

Go TopGo Top


4/22

Review of

La s t session


5/22

Test of ba seline kn ow ledgeTest of ba seline kn ow ledge


6/22

Go TopGo Top

La yout of com putat ion


7/22

Out right S ale Re al Pro per ty

V a lue of the P r op erty x 6%


8/22

Ins tal men t or terms Re al Pro per ty

Se lling Pri ceLess: Cos t a nd Ex pensesLess: Mor tga ge Ass umed

T a xa b le Amo un tDivided by n umber of a mor tizat ionsx mon ths co lle cted wi th in the ye a r x 6%


9/22

S tock P u r cha se

Taxab le Ba se Taxab le Ba se S elling P riceS elling P rice = = Less: Co st a nd Other Allowab le Exp enses Less: Co st a nd Other Allowab le Exp enses ==

Net Cap ita l Ga in/( Lo ss) Net Cap ita l Ga in/( Lo ss) ==

Tax D ue o n the Entire Tr a ns a cti o n Tax D ue o n the Entire Tr a ns a cti o n 5% o n the f irst 100,0005% o n the f irst 100,000 ==10% ov er 100,00010% ov er 100,000 ==To ta l Tax D ueTo ta l Tax D ue


10/22

Go TopGo Top A llow a b le Ex pendi tu re


11/22

A llowa b le cos ts m a y in clu de:

the p rice pa id to a cquire the a ssetthe p rice pa id to a cquire the a ssetthe c o sts of a ny im p r ov ements m a de to yo ur a ssetsthe c o sts of a ny im p r ov ements m a de to yo ur a ssetsIncident a l c o sts of a cquiring o r dis po sing of the Incident a l c o sts of a cquiring o r dis po sing of the

a sset (e.g. Do cument a ry S ta m p Tax )a sset (e.g. Do cument a ry S ta m p Tax )

So metimes yo u use the m a r ket va lue of the a sset So metimes yo u use the m a r ket va lue of the a sset inste a d of the a ctu a l c o st (inste a d of the a ctu a l c o st (egeg i f yo u recei ved the if yo u recei ved the

a sset a s a gi f t).a sset a s a gi f t).


12/22

Go TopGo Top

Index at ion allow a nce a nd

re lief


13/22

Index at ion

It is a me a sure of in f la tio n th a t f inds app lic a tio n in It is a me a sure of in f la tio n th a t f inds app lic a tio n in tax law, w hen c o m p uting lo ngtax law, w hen c o m p uting lo ng--term c ap ita l g a ins o n term c ap ita l g a ins o n s a le of a ssetss a le of a ssets

Co m p uting Cap ita l Ga ins w ith the c o nsider a tio n of Co m p uting Cap ita l Ga ins w ith the c o nsider a tio n of the T ime V a lue of Mo ney using in f la tio n r a te a s the T ime V a lue of Mo ney using in f la tio n r a te a s inde x.inde x.

We Do n o t h av e Inde xa tio n in the P hili pp inesWe Do n o t h av e Inde xa tio n in the P hili pp ines


14/22

Re lief

T ap er Tap er re lief re lief providesprovides aa valua b levalua b le red uct ionred uct ion inin thethe cap italcap italga insga ins ta xta x pa ya b lepa ya b le onon thethe dis pos aldis pos al of of a sse ts,a sse ts, es pe c iallyes pe c iallythosethose wi thwith qual ifyingqual ifying b usinessbusiness useuse..

Ro llover Ro llover Re lief Re lief-- Pos tponemen tPos tponemen t of of cap italcap ital ga insga insta xta x allowedallowed toto aa businessbusiness thatthat reinves tsreinves ts thethe proceedsproceedsfromfrom aa p rofita b leprofita b le s ales ale of of a na n a sse t,a sse t, a sa s a na n in cen tiveincen tive for for re plac ingre plac ing o lder o lder cap italcap ital a sse tsa sse ts wi thwith newnew or or be tter be tter onesones. .

Ag a in, Ag a in, therethere a rea re nono Re lief Re lief inin thethe P h ilipp inesP h ilipp ines


15/22

De a ling w ith

lo ssesGo TopGo Top


16/22

Defini tion

T he loss in cu rred w hen a cap ital a sse t (inves tmen t or re al es tat e) de cre a ses in v alu e. T h is loss is no t re al izedun til the a sse t is so ld for a price that is lower tha n theorigin al pu r cha se price.

Ca s ualt y Loss app roved by BIR o ccu rring fromcala mities.


17/22

Ca s ualt y LossesAA c a su a lty lo ss c a nn o t just b e cl a imed a s a deducti o n. The c a su a lty lo ss c a nn o t just b e cl a imed a s a deducti o n. The aff ected taxpa yer must re po rt the lo ss to the BIR w ithin 45 d a ys aff ected taxpa yer must re po rt the lo ss to the BIR w ithin 45 d a ys af ter the e vent.af ter the e vent.The re po rt sh a ll b e f iled in the fo rm of a Swo rn Decl a r a tio n of The re po rt sh a ll b e f iled in the fo rm of a Swo rn Decl a r a tio n of

Lo ss , st a ting the fo llow ing:Lo ss , st a ting the fo llow ing:aa .. Na tureNa ture of of thethe e vente vent th a tth a t g av eg av e riserise t oto thethe l o sslo ss a nda nd timetime of of itsitso ccurrenceo ccurrence; ;bb .. Descri p tio nDescri p tio n a nda nd l o c a tio nlo c a tio n of of thethe d a m a gedd a m a ged p r op ertiesp r op erties; ;cc.. ItemsItems neededneeded t oto c o m p utec o m p ute thethe l o sseslo sses suchsuch a sa s c o stc o st of of thethe

p r op ertiesp r op erties; ; de p reci a tio n ,de p reci a tio n , if if a nya ny;; va lueva lue of of thethe p r op ertiesp r op erties b e fo reb e fo rea nda nd af ter af ter thethe e vente vent; ; a nda nd c o stc o st of of re pa ir re pa ir;; a nda nddd.. Am o untAm o unt of of insur a nceinsur a nce o r o r o ther o ther c o m p ens a tio nc o m p ens a tio n recei vedrecei ved o r o r recei vab lesrecei vab les


18/22

Tre at men t

Cap ita l Lo sses Cap ita l Lo sses deducted f r o m Inc o me deducted f r o m Inc o me s a me ye a r s a me ye a r

Ca su a lty Lo sses Ca su a lty Lo sses -- deducted in the Inc o me deducted in the Inc o me S ta tement a s deducti o n to a ssets a nd/ o r ,if S ta tement a s deducti o n to a ssets a nd/ o r ,if app lic ab le , re pa irs e xp ense.app lic ab le , re pa irs e xp ense.


19/22

Go TopGo Top


20/22

Cap ital Ga ins A llowa nces

In s o me c o untriesIn s o me c o untries , there a re thresh o ld , there a re thresh o ld a m o unts b e fo re c ap ita l a m o unts b e fo re c ap ita l g a ins a re g a ins a re c o m p uted. The a llowa nces c o m p uted. The a llowa nces r a nge f r o m r a nge f r o m 10,10010,100 toto 10,60010,600

Tax r a tes a ls o di ff ers p er a m o unt of Tax r a tes a ls o di ff ers p er a m o unt of Sa la ry re po rted to the Intern a l Re venue.Sa la ry re po rted to the Intern a l Re venue.

Ag a in , No t App lic ab le in the P hili pp inesAg a in , No t App lic ab le in the P hili pp ines


21/22

Top ics fo r Rese a rch

T a x form usedT a x r at esCalculat ing the ta x pa ya b le

Re por ting Period

Go TopGo Top


22/22

RequiredCalculat e the ta x pa ya b le in

res pe ct of cap ital ga ins

Go TopGo Top

unit 12 session 12

Documents