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    Alison Is Qualifies To Income Tax From Business and Compensation, OSD and 8% Fixed Tax Rate

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    Nichole Tumulak
    Allison earns a monthly salary of PHP 100,000 and owns a baby accessories shop with annual sales of PHP 2.4 million. She has three options for calculating her income tax: 1) combining compensation and business income, 2) using an optional standard deduction, or 3) an 8% fixed tax rate on gross sales. Option 1 results in the lowest total income tax of PHP 394,100.

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    Alison Is Qualifies To Income Tax From Business and Compensation, OSD and 8% Fixed Tax Rate

    Uploaded by

    Nichole Tumulak
    30 views7 pages
    Allison earns a monthly salary of PHP 100,000 and owns a baby accessories shop with annual sales of PHP 2.4 million. She has three options for calculating her income tax: 1) combining compensation and business income, 2) using an optional standard deduction, or 3) an 8% fixed tax rate on gross sales. Option 1 results in the lowest total income tax of PHP 394,100.

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    Allison earns a monthly salary of PHP 100,000 and owns a baby accessories shop with annual sales of PHP 2.4 million. She has three options for calculating her income tax: 1) combining compensation and business income, 2) using an optional standard deduction, or 3) an 8% fixed tax rate on gross sales. Option 1 results in the lowest total income tax of PHP 394,100.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    30 views7 pages

    Alison Is Qualifies To Income Tax From Business and Compensation, OSD and 8% Fixed Tax Rate

    Uploaded by

    Nichole Tumulak
    Allison earns a monthly salary of PHP 100,000 and owns a baby accessories shop with annual sales of PHP 2.4 million. She has three options for calculating her income tax: 1) combining compensation and business income, 2) using an optional standard deduction, or 3) an 8% fixed tax rate on gross sales. Option 1 results in the lowest total income tax of PHP 394,100.

    Copyright:

    © All Rights Reserved
    Download as XLSX, PDF, TXT or read online from Scribd
    Download as xlsx, pdf, or txt
    of 7

    Case Study # 3

    Allison works as a Financial Controller of GAL Company and earns monthly gross salary of Php
    She is entitled to the mandatory benefits of 13thmonth pay, SSS, Philhealthand Pag-ibig
    She works in the same company for the whole calendar year of 2021. Aside from employment in
    Her shop, which is non-VAT registered, has annual gross sales of Php 2,400,000, cost of sales of

    1. What options are available to Allison as far as income tax is concerned?


    Alison is qualifies to Income tax from business and compensatio
    2. How much is her annual income tax due in each option?
    Income tax from business and compensation = 394,100
    OSD = 586,100
    8% fixed rate = 432,100
    3. Which option would result to the lowest income tax possible?
    The option with the lowest income tax payable is option 1, from the computatio
    Allison will benefit if she will use the calculation of compensation and busines
    on option 1 for the results are less costly compared to the other option.
    Income tax
    Yearly gross salary 100,000.00
    Monthly contribution 2,750.00
    Gross salary 97,250.00

    Business

    Annual sales
    Cost of sales'
    total
    Expenses
    Total

    Option 1- Compensation and Business

    Annual Salary 1,167,000.00

    For income
    Income bracket rate difference
    - 250,000.00 250,000.00
    250,000.00 400,000.00 20% 150,000.00
    400,000.00 800,000.00 25% 400,000.00
    800,000.00 1,167,000.00 30% 367,000.00

    For business
    Income bracket rate difference
    - 250,000.00 250,000.00
    250,000.00 400,000.00 20% 150,000.00
    400,000.00 800,000.00 25% 400,000.00

    Percentage tax 2,400,000.00 1%


    Total tax due
    rns monthly gross salary of Php 100,000.
    Philhealthand Pag-ibig
    021. Aside from employment income, she owns a shop selling baby’s accessories
    Php 2,400,000, cost of sales of Php 1,000,000, and operating expenses of Php 600,000.

    business and compensation, OSD and 8% fixed tax rate

    tion = 394,100

    is option 1, from the computation of the three different option. For income
    on of compensation and business
    ared to the other option.

    1,167,000.00

    For business

    2,400,000.00
    1,000,000.00
    1,400,000.00 Total tax due
    600,000.00
    800,000.00

    Option 2- OSD

    Annual Salary

    For income
    Income bracket
    excess additional Total -
    250,000.00
    30,000.00 400,000.00
    30,000.00 130,000.00 800,000.00
    130,000.00 240,100.00

    For business
    Gross Sale
    excess additional Total 40% Optional Standard Deduction
    Total taxable income
    30,000.00
    30,000.00 130,000.00 Income bracket
    -
    250,000.00
    24,000.00 400,000.00
    394,100.00 800,000.00

    Percentage tax
    Total tax due
    Option 3- 8% fixed rate

    Annual Salary 1,167,000.00

    Income bracket rate difference excess additional


    - 250,000.00 250,000.00
    250,000.00 400,000.00 20% 150,000.00
    400,000.00 800,000.00 25% 400,000.00 30,000.00
    800,000.00 1,167,000.00 30% 367,000.00 130,000.00

    Gross sales 2,400,000.00


    Tax rate 8%
    Tax due 192,000.00

    1,167,000.00

    rate difference excess additional Total


    250,000.00 250,000.00
    400,000.00 20% 150,000.00 30,000.00
    800,000.00 25% 400,000.00 30,000.00 130,000.00
    1,167,000.00 30% 367,000.00 130,000.00 240,100.00

    2,400,000.00
    ptional Standard Deduction 960,000.00
    xable income 1,440,000.00

    rate difference excess additional Total


    250,000.00 250,000.00
    400,000.00 20% 150,000.00 30,000.00
    800,000.00 25% 400,000.00 30,000.00 130,000.00
    1,440,000.00 30% 640,000.00 130,000.00 322,000.00

    2,400,000.00 1% 24,000.00
    586,100.00
    Total

    30,000.00
    130,000.00
    240,100.00

    432,100.00

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