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MARY JOY P. JUNIO, CPA

Notre Dame of Midsayap College

Midsayap, Cotabato

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Gross Income

Defined

Gross income means thepertinent items ofincome referred to in

Section 32(A) of the TaxCode. It includes allincome from whateversource (unless exemptfrom tax by law)including, but notlimited to the following

items:

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1. Compensation for services in whateverform paid including fees, salaries and

wages, commissions, and similar items2. Gross Income derived from the conductof trade or business or the exercise of aprofession

3. Gains from dealings in property

4. Interests5. Rents6. Royalties7. Annuities

8. Prizes and Winnings9. Pensions10. Partners distributive share from the net

income of general professional

partnership.

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Gross Compensation Incomemeans any remuneration for

rendering personal services.Generally, compensationincome is obtained from andemployer-employeerelationship between payorand recipient.

Gross Compensation

Income

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Classification of Gross

Compensation Income

1. Basic salary or wage2. Honoraria3. Fixed or variable allowances

4. Commission5. Fees6. Tips and gratuities

7. Hazard or emergency pay8. Retirement pay9. Separation pay

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10. Pension

11. Vacation and sick leave12. Thirteenth month pay and other

benefits

13. Overtime pay14. Profit sharing15. Awards for special services16. Beneficial payments

17. Other forms of compensation

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Basic salary or wageSalaryrefers to earnings receivedperiodically for a regular workother than manual labor, such asa monthly salary of an employee.

Wages, on the other hand, areearnings received usually

according to specified intervals ofwork, as by the hour, day or week.

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Honoraria

Honoraria are paymentsgiven in recognition forservices performed forwhich established practice

discourages charging a fixedfee.

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Fixed or variable

allowancesAre received by publicofficer or employee or

officer or employee ofprivate entity, in additionto the regularcompensation:

TransportationRepresentationOthers such as COLA

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Commission

Commission is usuallya percentage of totalsales or on certainquota of sales volume

attained as part ofincentives

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Fees are received by an employee for

the services rendered to the employerincluding a directors fee of thecompany, fees paid to the publicofficials, such as clerks of court orsheriffs for services rendered in theperformance of their official duty overand above their regular salaries

Legal fees paid by a union on behalf of

its president constitute compensation.

Marriage fees, baptismal offeringsreceived by a clergyman for servicesrendered are considered compensation

Fees

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Tips and gratuities

Tips or gratuities paiddirectly to an employee

which are notaccounted for by theemployee to the

employer.

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Hazard or emergency

payThis is an additionalpayment received due toworkers, exposure to dangeror harm while working. Thisis normally added to thebasic salary together with

the overtime pay and nightdifferential pay to arrive atgross salary.

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Retirement payIt refers to a lump sumpayment received by an

employee who hasserved a company for aconsiderable period oftime and has decided towithdraw from work intoprivacy.

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1. SSS or GSIS retirement pays2. Retirement pay due to old

age provided that the

following requirements aremet:a. Approved by the BIRb. Reasonable

c. At least 10 years employedd. At least 50 years olde. Availed for the first time

Retirement pay is

taxable, except: