FABIAN & ASSOCIATES, CPAs

CERTIFIED PUBLIC ACCOUNTANTS

Seminar on
Tax Reform for Acceleration
and Inclusion (TRAIN)
(Republic Act 10963)

January 31, 2018

Pinnacle Hotel, Davao City
Facebook page:
Fabian & Associates, CPAs - TRAIN Law
Homer C. Gaang, CPA
Passed Certified Public Accountant (CPA)
Board Examination last July 2014

Magna Cum Laude - BS Accountancy

Notre Dame of Midsayap College
Graduated Year 2013

Audit Group Head – Fabian & Associates,

CPAs
INCOME TAX
A. For Compensation Income Earners
• New personal income tax table for individuals
• Those with annual taxable income below P250,000
are exempt from paying personal income tax
• The first P90,000 of the 13th month pay and bonuses
will be exempt from income tax

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Pre-TRAIN Income Tax Table for Individuals

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Income Tax Table for Individuals
Effective January 1, 2018

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Income Tax Table for Individuals
Effective January 1, 2023

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Illustration 1. Compensation Income Earner
Taxpayer
Old Tax System TRAIN
Ana Cortez
Annual Basic Salary Annual Gross Income: Annual Gross Income:
A PHP 252,000
13th mo. pay & other benefits
A+B 273,000 A+B 273,000
B PHP 21,000
Deductions and Exemptions: Deductions and Exemptions:

C
Mandatory contributions B+C+D+E 136,166 B+C 36,166
PHP 15,166
Net Taxable Income Net Taxable Income
Personal Exemption
D PHP 50,000 136,834 236,834
Allowance for 2 dependents
E PHP 50,000 TAX DUE TAX DUE
PHP 21,867 PHP -0-
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Illustration 2. Compensation Income Earner
Taxpayer
Old Tax System TRAIN
Juan Lord Cruz
Annual Basic Salary Annual Gross Income: Annual Gross Income:
A PHP 360,000
13th mo. pay & other benefits
A+B 390,000 A+B 390,000
B PHP 30,000
Deductions and Exemptions: Deductions and Exemptions:

C
Mandatory contributions B+C+D+E 200,000 B+C 50,000
PHP 20,000
Net Taxable Income Net Taxable Income
Personal Exemption
D PHP 50,000 190,000 340,000
Allowance for 4 dependents
E PHP 100,000 TAX DUE TAX DUE
PHP 35,000 PHP 18,000
FABIAN & ASSOCIATES, CPAs
CERTIFIED PUBLIC ACCOUNTANTS
Illustration 3. Compensation Income Earner
Taxpayer
Old Tax System TRAIN
Cristy Ah-Kino
Annual Basic Salary Annual Gross Income: Annual Gross Income:
A PHP 10,500,000
13th mo. pay & other benefits
A+B 11,375,000 A+B 11,375,000
B PHP 875,000
Deductions and Exemptions: Deductions and Exemptions:

C
Mandatory contributions B+C+D+E 995,000 B+C 895,000
20,000
PHP
Personal Exemption
(B- 82,000) (793,000) (B- 90,000) (785,000)
D PHP 50,000
Net Taxable Income Net Taxable Income

Allowance for 2 dependents

11,173,000 11,265,000
E PHP 50,000 TAX DUE TAX DUE
PHP 3,540,360 PHP 3,552,000
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CERTIFIED PUBLIC ACCOUNTANTS
B. Purely Self-employed and Professionals
• Self-employed and professionals with gross
sales and/or gross receipts below the
P3,000,000 VAT Threshold now have the
option to pay a simpler 8% flat tax in lieu of
income and percentage tax, while those
above the VAT Threshold will follow the
Personal Income Tax Schedule
• Option available only to Non-VAT registered
person

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C. Mixed Income Earners

• On their compensation income – at graduated rates

• On their income from the conduct of trade or business
or the practice of profession
a. If exceeding the VAT threshold – at graduated rates
b. If below the VAT threshold – either 8% of gross sales/
receipts and other non-operating income in excess of
PHP250,000 in lieu of graduated rates and percentage tax
or graduated rates, at the option of the taxpayer

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Fringe benefit tax given to non-rank and file employees

Sec. 33 (A) Fringe benefits given to Effective 1 January 2018, fringe

non-rank and file employees are
subject to 32% final tax rate. The
grossed-up monetary value is
determined by dividing the actual
monetary value by 68%.
benefits given to non-rank and file
employees are subject to 35% final
tax rate. The grossed-up monetary
value is determined by dividing the
actual monetary value by 65%.

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Optional Standard Deduction (“OSD”)
Sec. 34 (L) In lieu of the itemized
allowable deductions, an individual
subject to tax, other than a non-
resident alien, may elect an OSD of
40% of gross sales or gross
receipts.
In case of a general professional
partnership, the OSD may be
availed only once by either the
general professional partnership or
the partners comprising such
partnership.
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Deduction of premium payments on health and/or
hospitalization insurance

Sec. 34 (M) Allowed deduction of PHP2,400 per year Repealed

or PHP200 per month worth of premium payments on
health and/or hospitalization insurance of an
individual provided that the family has a gross income
not exceeding PHP250,000 for the taxable year

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Income tax collected at source – husband and wife

Sec. 79 (F) Husband deemed head of the family Repealed

and proper claimant of the additional exemption.
Taxes to be withheld from the wages of the wife
must be in accordance with the table for zero
exemption of the withholding tax table.

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Declaration of income tax for individuals
Sec. 74 (A) Every individual subject to
income tax and is receiving self-
employment income shall make and file a
declaration of his estimated income for the
current taxable year on or before 15 April of
the same taxable year.
Filing of declaration of
estimated income shall be
on or before 15 May of the
same taxable year. (Only
1st quarter deadline was
changed)
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Declaration of income tax for individuals
Sec. 74 (A) Every individual subject to
income tax and is receiving self-
employment income shall make and file a
declaration of his estimated income for the
current taxable year on or before 15 April of
the same taxable year.
Filing of declaration of
estimated income shall be
on or before 15 May of the
same taxable year. (Only
the 1st quarter deadline was
changed)
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Filing of Income Tax Return - Individual

Sec. 51 (A) (2) (a) An individual An individual whose taxable

whose gross income does not
exceed his total personal and
additional exemptions for
dependents are not required to file
an income tax return (“ITR”)
income does not exceed
PHP250,000 based on the tax
schedule for compensation
income earners shall not be
required to file an ITR.

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