Assignment: Final Tax on Passive Income

A taxpayer has the following data pertaining to his income for the year 2018:
Philippines Abroad
Interest income from dollar deposits, BDO 30,000 40,000
Royalties from books 20,000 30,000
Prizes from Panagbenga Festival 20,000 -
Interest income from time deposits (3 years) 65,000 75,000
Royalties from computer programs 20,000 40,000
Winnings from an electronic raffle (randomly chosen) 10,000 -
Interest income from peso bank deposits, MBTC 45,000 25,000
Winnings from sweepstakes 80,000 90,000
Dividend income from domestic corporation 27,000 13,000
Interest income from long term deposits (6 years maturity) 55,000 35,000
Dividend income from a foreign corporation 33,000 22,000
Interest income from FCDU 50,000 60,000
Prizes from Bingo Bonanza 10,000 10,000
Interest income from long term investment (5 years) 40,000 -
Additional data:
 The interest income from long term deposits with maturity of 6 years was pre-terminated.
On the day of pre-termination, the remaining maturity of the investment is 4 years and 2
months.
 The prizes received by the taxpayer from Panagbenga Festival was in lieu of his
recognition and contribution to civic organization; he does not apply for it and he is not
required to render services in the future.
 The taxpayer is also a good citizen of the Philippines; when he found out that a certain
company was not paying correct taxes, he reported it to the BIR. After conducting
investigation, the BIR assessed the evader amounting to 15,000,000.
Informer’s Tax Reward 15M x 10% = 1.5M
Reward: 1M x 10% = 100,000
Requirement:
Compute the final tax on passive income assuming the taxpayer is: (10 pts.)
1. Resident citizen
2. Non-resident citizen
3. Resident Alien
4. Non-resident alien engaged in business
5. Non-resident alien not engaged in business
6. Domestic corporation
7. Resident foreign corporation
8. Non-resident foreign corporation
 9. Non – resident foreign corporation under tax sparing rule

RC:

Interest income from dollar deposits, BDO (30,000 x 15%) 4,500

Royalties from books (20,000 x 10%) 2,000
Prizes from Panagbenga Festival 20,000
Interest income from time deposits (3 years) (65,000 x 20%) 13,000
Royalties from computer programs (20,000 x 20%) 4,000
Winnings from an electronic raffle (randomly chosen) 10,000 x 20% 2,000
Interest income from peso bank deposits, MBTC (45,000 x 20%) 9,000
Winnings from sweepstakes (80,000 x 20%) 16,000
Dividend income from domestic corporation (27,000 x 10%) 2,700
Interest income from long term deposits (6 years maturity) (55,000 x 5%) 2,750
Dividend income from a foreign corporation 33,000
Interest income from FCDU (50,000 x 15%) 7,500
Prizes from Bingo Bonanza 10,000
Interest income from long term investment (5 years) 40,000
Total 63,450

Informer’s tax reward 100,000

Total final tax 163,450

Mr. Chris received interest income from his peso bank deposit with RCBC amounting to P 9,000.

9,000/80% x 20% = 2,250

NRC:

Interest income from dollar deposits, BDO (30,000 x 15%) 4,500

Royalties from books (20,000 x 10%) 2,000
Prizes from Panagbenga Festival 20,000
Interest income from time deposits (3 years) (65,000 x 20%) 13,000
Royalties from computer programs (20,000 x 20%) 4,000
Winnings from an electronic raffle (randomly chosen) 10,000 x 20% 2,000
Interest income from peso bank deposits, MBTC (45,000 x 20%) 9,000
Winnings from sweepstakes (80,000 x 20%) 16,000
Dividend income from domestic corporation (27,000 x 10%) 2,700
Interest income from long term deposits (6 years maturity) (55,000 x 5%) 2,750
Dividend income from a foreign corporation 33,000
Interest income from FCDU (50,000 x 15%) 7,500
Prizes from Bingo Bonanza 10,000
Interest income from long term investment (5 years) 40,000
Total 51,450

Informer’s tax reward 100,000

Total final tax 151,450

RA:

Interest income from dollar deposits, BDO (30,000 x 15%) 4,500

Royalties from books (20,000 x 10%) 2,000
Prizes from Panagbenga Festival 20,000
Interest income from time deposits (3 years) (65,000 x 20%) 13,000
Royalties from computer programs (20,000 x 20%) 4,000
Winnings from an electronic raffle (randomly chosen) 10,000 x 20% 2,000
Interest income from peso bank deposits, MBTC (45,000 x 20%) 9,000
Winnings from sweepstakes (80,000 x 20%) 16,000
Dividend income from domestic corporation (27,000 x 10%) 2,700
Interest income from long term deposits (6 years maturity) (55,000 x 5%) 2,750
Dividend income from a foreign corporation 33,000
Interest income from FCDU (50,000 x 15%) 7,500
Prizes from Bingo Bonanza 10,000
Interest income from long term investment (5 years) 40,000
Total 63,450

Informer’s tax reward 100,000

Total final tax 163,450

NRA-ETB:

Interest income from dollar deposits, BDO (30,000 x 15%) 4,500

Royalties from books (20,000 x 10%) 2,000
Prizes from Panagbenga Festival 20,000
Interest income from time deposits (3 years) (65,000 x 20%) 13,000
Royalties from computer programs (20,000 x 20%) 4,000
Winnings from an electronic raffle (randomly chosen) 10,000 x 20% 2,000
Interest income from peso bank deposits, MBTC (45,000 x 20%) 9,000
Winnings from sweepstakes (80,000 x 20%) 16,000
Dividend income from domestic corporation (27,000 x 20%) 5,400
Interest income from long term deposits (6 years maturity) (55,000 x 5%) 2,750
Dividend income from a foreign corporation 33,000
Interest income from FCDU (50,000 x 15%) 7,500
Prizes from Bingo Bonanza 10,000
Interest income from long term investment (5 years) 40,000
Total 54,150
Informer’s tax reward 100,000

Total final tax 154,150

NRANETB:

Interest income from dollar deposits, BDO (30,000 x 15%) 4,500

Royalties from books 20,000
Prizes from Panagbenga Festival 20,000
Interest income from time deposits (3 years) 65,000
Royalties from computer programs 20,000
Winnings from an electronic raffle (randomly chosen) 10,000
Interest income from peso bank deposits, MBTC 45,000
Winnings from sweepstakes 80,000
Dividend income from domestic corporation 27,000
Interest income from long term deposits (6 years maturity) 55,000
Dividend income from a foreign corporation 33,000
Interest income from FCDU (50,000 x 15%) 7,500
Prizes from Bingo Bonanza 10,000
Interest income from long term investment (5 years) 40,000
Total Gross income 405,000

X 25% 101,250

Exam: Final on passive income – 362,000 x 25% = 90,500

Final tax of income of NRANETB – 101,250

DC:

Interest income from dollar deposits, BDO (30,000 x 15%) 4,500

Royalties from books (20,000 x 20%) 4,000
Interest income from time deposits (3 years) (65,000 x 20%) 13,000
Royalties from computer programs (20,000 x 20%) 4,000
Interest income from peso bank deposits, MBTC (45,000 x 20%) 9,000
Dividend income from domestic corporation exempt
Interest income from long term deposits (6 years maturity) (55,000 x 20%) 11,000
Dividend income from a foreign corporation 33,000
Interest income from FCDU (50,000 x 15%) 7,500
Interest income from long term investment (5 years) 40,000 x 20% 8,000
Total 61,000
RFC:
Interest income from dollar deposits, BDO (30,000 x 7.5%) 2,250
Royalties from books (20,000 x 20%) 4,000
Interest income from time deposits (3 years) (65,000 x 20%) 13,000
Royalties from computer programs (20,000 x 20%) 4,000
Interest income from peso bank deposits, MBTC (45,000 x 20%) 9,000
Dividend income from domestic corporation exempt
Interest income from long term deposits (6 years maturity) (55,000 x 20%) 11,000
Dividend income from a foreign corporation 33,000
Interest income from FCDU (50,000 x 7.5%) 3,750
Interest income from long term investment (5 years) 40,000 x 20% 8,000
Total final tax on passive income 55,000

NRFC – without tax sparing:

Interest income from dollar deposits, BDO 30,000
Royalties from books 20,000
Interest income from time deposits (3 years) 65,000
Royalties from computer programs 20,000
Interest income from peso bank deposits, MBTC 45,000
Dividend income from domestic corporation 27,000
Interest income from long term deposits (6 years maturity) 55,000
Dividend income from a foreign corporation 33,000
Interest income from FCDU 50,000
Interest income from long term investment (5 years) 40,000
Total gross income subject to final tax 272,000
X 30% 81,600

With sparing rule:

Interest income from dollar deposits, BDO 30,000

Royalties from books 20,000
Interest income from time deposits (3 years) 65,000
Royalties from computer programs 20,000
Interest income from peso bank deposits, MBTC 45,000
Interest income from long term deposits (6 years maturity) 55,000
Dividend income from a foreign corporation 33,000
Interest income from FCDU 50,000
Interest income from long term investment (5 years) 40,000
Total 245,000

X 30% 73,500
Dividend income (with sparing) 27,000 x 15% 4,050

Total 77,550