question archive 1) The following are NOT compensations but may be treated as income from profession, except: a
1) The following are NOT compensations but may be treated as income from profession, except: a
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1) The following are NOT compensations but may be treated as income from profession, except:
a. Retainer fees
b. Talent fees or charges
c. Per diems of directors
d. Commissions to sales personnel
e. None of the above
2. The following comprise non-taxable or exempt compensation, except:
a. Mandatory contributions
b. Supplementary compensation
c. Compensation exempt under the NIRC
d. Compensation necessary to the employer's trade.
e. None of the above
3. Case 1: Nora made a total of P5,000 contributions for SSS, Philhealth, Pag-ibig, and union dues. The P5,000 contributions form part of Nora's gross compensation. However, in computing her taxable compensation, such amount must be excluded. Case 2: Nora suddenly got sick and was hospitalized for 1 month. She received a certain amount of benefit from SSS. Her hospital bills were also reduced by her philhealth benefit. The amount received by Nora from SSS and the reduction in her hospital bills constitute taxable compensation to Nora.
a. Both cases are correct
b. Both cases are incorrect
c. Only case 1 is correct
d. Only case 2 is correct
4. The following are de minimis benefits, except:
a. Uniforms and clothing allowance not exceeding P6,000 per annum;
b. Rice subsidy of P2,000 or one 50-kg sack of rice per month worth not more than P2,000;
c. Monetized unused sick leave credits of private employees not exceeding 10 days during the year;
d. Monetized unused vacation and sick leave credits paid to government officials and employees;
e. None of the above
5. How should the excess amount of de minimis over the limit set by law be treated for a rank and file employee?
a. Treated as taxable compensation
b. Added to 13th month pay and other benefits
c. Added to fixed compensation
d. Exclusion from gross income
6. How should the excess amount of de minimis over the limit set by law be treated for a managerial employee?
a. Treated as fixed compensation
b. Added to 13th month pay and other bonuses
c. Taxable compensation subject to fringe benefit tax
d. Taxable compensation subject to regular income tax
7. Statement 1: CBA or productivity incentive scheme benefits shall only be exempt as "de minimis" benefits if the total amount thereof does not exceed P10,000 per taxable year. Statement 2: CBA incentive in the amount of P15,000 shall be de minimis and tax-exempt up to P10,000 only.
a. Both statements are true
b. Both statements are false
c. Only statement 1 is true
d. Only statement 2 is true
8. Which of the following may be treated under "13th month pay and other benefits"?
a. 14th month pay
b. "Additional Compensation Allowance" of government personnel
c. Other fringe benefits of rank and file employees
d. All of the above
9. Statement 1: Foreign government embassies, diplomatic missions and international organizations are tax-exempt in their function as such in the Philippines. Statement 2: Generally, Filipino employees of foreign governments, international missions, and organizations in the Philippines are taxable. Statement 3: Employees working in Philippine embassies or Philippine consulate offices are considered as "resident citizens", hence their salaries as such are taxable.
a. All statements are true
b. Only statement 1 is true
c. Only statements 1 and 2 are true
d. Only statements 1 and 3 are true
10. Which of the following compensations is/are not taxable compensation to the employee?
a. Personnel Economic Relief Allowance (PERA)
b. Representation and Transportation Allowance (RATA) of public officers and employees
c. Travelling allowance subject to liquidation by employee
d. All of the above
e. None of the above
11. Which of the following does not form part of the taxable regular compensation?
a. Cost of Living Allowance (COLA)
b. Basic salary
c. Representation and Travel Allowance (RATA) of government employees
d. Fixed transportation allowance
e. None of the above
12. Which of the following is not a supplementary compensation?
a. Profit sharing bonus
b. Overtime pay
c. Commissions
d. Taxable 13th month pay and other benefits
e. None of the above
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1. E. None of the above.
*All of the given choices will form part of the individual's income from profession.
2. E. Compensation necessary to the employer's trade.
*This is a taxable income on the part of the individual because this is received in the rendering of services.
3. C. Only case 1 is correct.
*The mandatory contributions made by Nora is excluded from comoutation of taxable income. While in the statement 2 the benefits received from SSS and Philhealth must also be excluded in her taxable income because they are benefits from gov't not a compensation.
4. C. Monitized sick leave credits for private employees not exceeding ten days during the year.
*De Minimis benefits are benefits provided by employers to their employees in forms other than cash but of relatively small value.
For private employees vacation leave is the convertible leave under De minimis benefits.
5. B. Added to 13th month pay and other benefits.
*The excess must be added to 13th month pay and other benefits with a limit of P 90,000 per taxable year and if it exceeds the excess is subject to tax.
6. B. Added to 13th month pay and other benefits.
*The excess must be added to 13th month pay and other benefits with a limit of P 90,000 per taxable year and if it exceeds the excess is subject to tax.
7. A. Both statements are true.
*CBA and productivity incentive received by each employee during a taxble year must be P 10,000 only and the excess must form part of the 13th month pay and other benefits with a limit of P 90,000 if it excess it is subject to income tax.
8. D. All of the above.
*All of the excess benefits such as from 14th month pay, additional allowances, and fringe benefits of rank and file employees can be put in 13th month pay and other benefita with a limit of P 90,000 and it exceeds it is subject to income tax.
9. A. All statements are true.
*All of the statements are correct.
10. E. None of the above.
*All of the given choices are not considered as taxable compensation.
11. D. Fixed transportation allowance.
*It must form part of the taxable compensation because it is not reimbursed.
12. E. None of the above.
*Suplementary compensations are commissions, overtime pay, profit sharing, monetized vacation leaves, taxable 13th month pay and other benefits, and other remuneration received.
Step-by-step explanation
Compensation income is the income received for services rendered in different forms not limited to salary, fees, wages, commissions, and similar items.
Compensation for services:
- Paid in Cash - actual amount paid is taxable
- Paid in kind - fair value of the property received
- Tips and gratuities -taxable
Philippine Annual Income Tax Return or BIR FORM 1700 is the individual tax return in the Philippines that must be filled on or before April 15 of the following calendar year.
Based on Philippine taxation.
