TAXATION PART 3

concept of income

• all wealth which flows into the taxpayer other than mere return of capital

• the amount of money coming to a person /corporation within a specified time.

requisites of income to be taxable

1. there must be gain or profit

2. the gain or profit must be realized or received, actually or contructively

3. must not be exempted or excluded by law or treaty from income tax

doctrine of constructive receipt of income

taxpayer and which may be drawn by him at any time is subject to tax for the year during which it was so credited or set apart although not yet then actually received or reduced to his possession. Income must be credited to the taxpayer without any substantial limitation or condition upon which payment is to be made.

kinds of individual income taxpayers

1. resident citizen (rc)

2. non-resident citizen (NRC)

3. overseas contract worker (OCW)

4. resident alien (RA)

5. non-resident alien engaged in trade or business in the philippines (nra-etb)

6. non-resident alien not engage in trade or business in the philippines (nra-netb)