Unit 12 Session 11

8/3/2019 Unit 12 Session 11

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UNIT 12

TAXATIONSession 11


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RequiredRequired

Identify chargeable

assets and disposals foran individual or company


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Topics

Review of Last session

Test of baseline knowledge Incidence of Capital Gains

Chargeable assets and disposals

Basis of Assessment Treatment of Deductions

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Review of Last session


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Test of baselineknowledge


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Incidence of

Capital Gains


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Capital Gains

a profit that results from investments into a capital asset,

such as stocks, bonds orreal estate, which exceeds the

purchase price.

It is the difference between a higher selling price and a

lower purchase price, resulting in a financial gain for the

investor


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Capital Gains TaxCapital Gains Tax

Capital Gains Taxisataximposed ontheCapital Gains Taxisataximposed onthe

gains presumedto have beenrealized by thegains presumedto have beenrealized by the

sellerfromthesale,exchange, orothersellerfromthesale,exchange, orother

disposition ofcapitalassetslocatedinthedisposition ofcapitalassetslocatedinthePhilippines.Philippines.


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Chargeable assets anddisposals

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Capital Assets

Capital asset means property held by the taxpayer

Real Property

House and Lot

Lot (Residential, Agricultural, Industrial, Commercial)

Condominium

Building

Shares of StocksListed with the PSE

Not listed with the PSE


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Exclusions

a) stock in trade of the taxpayer or other property of a kind

which would properly be included in the inventory of the

taxpayer if on hand at the close of the taxable year;

b) property held by the taxpayer primarily for sale to

customers in the ordinary course of his trade or business;

c) property used in the trade or business of a character which

is subject to the allowance for depreciation provided insubsection (F) of Sec. 34 of the Code;

d) real property used in trade or business of the taxpayer


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Exclusions

The proceeds of the sale of the principal residence have been fully

utilized in acquiring or constructing new principal residence within

eighteen (18) calendar months

The historical cost or adjusted basis of the real property sold or

disposed will be carried over to the new principal residence built oracquired;

The Commissioner has been duly notified, through a prescribed

return, within thirty (30) days from the date of sale or disposition of

the persons intention to avail of the tax exemption;

Exemption was availed only once every ten (10) years; and Buyer shall pay the Capital Gains Tax


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Basis of

Assessment

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Real Property

Selling price

Zonal value

Fair Market Value of the Provincial or City Assessor,

whichever is higher.

If there is no zonal (whichever is higher)

Gross selling price per sales documents

fair market value that appears in the latest taxdeclaration.


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Shares of Stocks

Net capital gains realized from the sale, barter,

exchange or other disposition of shares of stocks in a

domestic corporation, considered as capital assets not

traded through the local stock exchange.

Selling Price less Purchase Price


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Treatment of DeductionsGo TopGo Top


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Deductions from SharesDeductions from Shares

Price shall include the following components:


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TreatmentTreatment

All Fees and charges shall be a component of the

purchase or selling price of the shares.

From the computations shall all gains and losses fromcapital asset be determined.


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Topics forResearch

Layout of computation

Allowable Expenditure

Indexation allowance and taper relief

Dealing with losses

Allowances

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Required

Calculate the capital gains

and losses for an individualand company, together with

relevant allowances

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Documents

Unit 12 Session 11