MARY JOY P.

JUNIO, CPA Notre Dame of Midsayap College Midsayap, Cotabato

refers to items or receipts not included in the determination of the taxable income because the law or treaty provides that they are exempt from income tax

Tax exemption of MWE Tax exempt contributions Benefits under the Employer Convenience Rule Proceeds of Life Insurance Gifts, Bequests, and Devises Compensation or Damages Retirement Benefits, etc.

are business expenses and losses incurred which the law allows to reduce gross business income to arrive at net income subject to tax.

General business expenses Interest Taxes Losses Bad debts Depreciation Charitable and other cont. Research and development Pension trust

Salaries and wages Supplies Rental Advertising Travelling Insurance premiums against fire

Are the arbitrary amounts allowed by the law as a deduction from the gross compensation income and/or net business income and/or professional income as the case may be, for personal, living or family expenses.

 1. Basic personal exemption is a

deductible allowance which amount allowed by law shall depend upon the status of the individual taxpayer himself. 2. Additional exemption is a deductible allowance in addition to the basic personal exemption allowed for qualified dependent children.

The dependent must be: 1.A taxpayers child 2.Chiefly dependent for support 3.Living with taxpayer 4.Not married, not gainfully employed and not more than 21 years old.

 Mr. Dela Cruz, married to Mrs. Dela Cruz, a plain housewife, with 6 qualified dependent children has a compensation income of P240,000.00 The total personal exemptions would be: Basic personal P50,000.00 Additional 100,000.00