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MARY JOY P. JUNIO, CPA

Notre Dame of Midsayap College

Midsayap, Cotabato

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refers to items orreceipts not included inthe determination of

the taxable incomebecause the law ortreaty provides that

they areexempt fromincome tax

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Tax exemption of MWETax exempt contributions

Benefits under the EmployerConvenience RuleProceeds of Life Insurance

Gifts, Bequests, and DevisesCompensation or DamagesRetirement Benefits, etc.

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are business expensesand losses incurred

which the law allowsto reduce gross

business income toarrive at net incomesubject to tax.

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General business expensesInterest

TaxesLossesBad debts

DepreciationCharitable and other cont.Research and development

Pension trust

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Salaries and wagesSupplies

RentalAdvertisingTravellingInsurancepremiums against

fire

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Are the arbitraryamounts allowed by thelaw as a deduction fromthe gross compensationincome and/or netbusiness income and/or

professional income asthe case may be, forpersonal, living or

family expenses.

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1. Basic personal exemption is adeductible allowance which amount

allowed by law shall depend upon thestatus of the individual taxpayerhimself.

2. Additional exemption is adeductible allowance in addition tothe basic personal exemption allowed

for qualified dependent children.

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The dependent must be:

1.A taxpayers child

2.Chiefly dependent for support3.Living with taxpayer

4.Not married, not gainfully

employed and not more than 21

years old.

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Mr. Dela Cruz, married to Mrs. Dela

Cruz, a plain housewife, with 6 qualifieddependent children has a compensation

income of P240,000.00 The total personal exemptions would

be:

Basic personal P50,000.00

Additional 100,000.00