MARY JOY P.

JUNIO, CPA Notre Dame of Midsayap College Midsayap, Cotabato

Gross income means the pertinent items of income referred to in Section 32(A) of the Tax Code. It includes all income from whatever source (unless exempt from tax by law) including, but not limited to the following items:

Gross Income Defined

1. Compensation for services in whatever form paid including fees, salaries and wages, commissions, and similar items 2. Gross Income derived from the conduct of trade or business or the exercise of a profession 3. Gains from dealings in property 4. Interests 5. Rents 6. Royalties 7. Annuities 8. Prizes and Winnings 9. Pensions 10. Partners distributive share from the net income of general professional partnership.

Gross Compensation Income

Gross Compensation Income means any remuneration for rendering personal services. Generally, compensation income is obtained from and employer-employee relationship between payor and recipient.

Classification of Gross Compensation Income

1. 2. 3. 4. 5. 6. 7. 8. 9. Basic salary or wage Honoraria Fixed or variable allowances Commission Fees Tips and gratuities Hazard or emergency pay Retirement pay Separation pay

10. Pension 11. Vacation and sick leave 12. Thirteenth month pay and other benefits 13. Overtime pay 14. Profit sharing 15. Awards for special services 16. Beneficial payments 17. Other forms of compensation

Basic salary or wage

Salary refers to earnings received periodically for a regular work other than manual labor, such as a monthly salary of an employee.

Wages, on the other hand, are earnings received usually according to specified intervals of work, as by the hour, day or week.

Honoraria
Honoraria are payments

given in recognition for services performed for which established practice discourages charging a fixed fee.

Fixed or variable allowances

Are received by public officer or employee or officer or employee of private entity, in addition to the regular compensation: Transportation Representation Others such as COLA

Commission
Commission is usually a percentage of total

sales or on certain quota of sales volume attained as part of incentives

Fees Fees are received by an employee for

the services rendered to the employer including a directors fee of the company, fees paid to the public officials, such as clerks of court or sheriffs for services rendered in the performance of their official duty over and above their regular salaries Legal fees paid by a union on behalf of its president constitute compensation. Marriage fees, baptismal offerings received by a clergyman for services rendered are considered compensation

Tips and gratuities

Tips or gratuities paid

directly to an employee which are not accounted for by the employee to the employer.

Hazard or emergency pay

This is an additional payment received due to workers, exposure to danger or harm while working. This is normally added to the basic salary together with the overtime pay and night differential pay to arrive at gross salary.

Retirement pay
It refers to a lump sum payment received by an employee who has served a company for a considerable period of time and has decided to withdraw from work into privacy.

Retirement pay is taxable, except:

1. SSS or GSIS retirement pays 2. Retirement pay due to old age provided that the following requirements are met: a. Approved by the BIR b. Reasonable c. At least 10 years employed d. At least 50 years old e. Availed for the first time