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U4.3 Optional Standard Deduction (Presentation Slides)

The document discusses the optional standard deduction (OSD) under Philippine tax law. It can be claimed by both resident individuals and domestic corporations. For individuals, gross sales or receipts are the basis for the OSD computation, while corporations deduct their cost of sales or services before applying the 40% OSD rate. An example is given showing that an individual's taxable income would be P600,000 and a corporation's would be P120,000 given the same gross sales amount of P1,000,000 and cost of sales of P800,000.

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Marc Geoffrey Habab
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923 views4 pages

U4.3 Optional Standard Deduction (Presentation Slides)

The document discusses the optional standard deduction (OSD) under Philippine tax law. It can be claimed by both resident individuals and domestic corporations. For individuals, gross sales or receipts are the basis for the OSD computation, while corporations deduct their cost of sales or services before applying the 40% OSD rate. An example is given showing that an individual's taxable income would be P600,000 and a corporation's would be P120,000 given the same gross sales amount of P1,000,000 and cost of sales of P800,000.

Uploaded by

Marc Geoffrey Habab
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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OPTIONAL

STANDARD
DEDUCTION
By Erica Jimenez
PERSONS COVERED

• Resident Citizens • Domestic Corporations


INDIVIDUALS • Non-Resident Citizens CORPORATIONS • Resident Foreign
• Resident Aliens Corporations

40% GROSS SALES (accrual)


GROSS RECEIPTS (cash basis) 40% GROSS INCOME
COST OF SALE
COST OF SERVICE Sales / Receipts
not allowed to be deducted Less: Sales Return, Discounts and Allowances
Cost of Sales / Cost of Services

Compensation Income Earner : not allowed Gross Income


Mixed Income Earner : related only to trade /
business / profession
ILLUSTRATION

INDIVIDUALS CORPORATIONS A retailer of goods, whose accounting


method is under the accrual basis, has a
BASIS: GROSS SALES / RECEIPTS GROSS INCOME gross sales of P1,000,000 with a cost of
sales amounting to P800,000 for the year
COS: NOT DEDUCTED DEDUCTED
2018. The taxpayer is qualified to choose
FS: NOT REQUIRED REQUIRED OSD as deductions.

How much is the amount of OSD and the


COMPUTATION: GS / GR GS / GR
amount of taxable income assuming the
LESS: SRDA LESS: SRDA
taxpayer is a/an:
LESS: COS
NET SALES a. Individual
LESS: OSD 40% GROSS INCOME
b. Corporation
OTHER INCOME
NET INCOME
OTHER INCOME TOTAL TAXABLE INCOME
A. INDIVIDUAL
LESS: OSD 40%
TOTAL TAXABLE INCOME
NET SALES P 1,000,000
NET TAXABLE INCOME
LESS: OSD (40% x P1M) 400,000
TAXABLE INCOME P 600,000
ILLUSTRATION

INDIVIDUALS CORPORATIONS A retailer of goods, whose accounting


method is under the accrual basis, has a
BASIS: GROSS SALES / RECEIPTS GROSS INCOME gross sales of P1,000,000 with a cost of
sales amounting to P800,000 for the year
COS: NOT DEDUCTED DEDUCTED
2018. The taxpayer is qualified to choose
FS: NOT REQUIRED REQUIRED OSD as deductions.

How much is the amount of OSD and the


COMPUTATION: GS / GR GS / GR
amount of taxable income assuming the
LESS: SRDA LESS: SRDA
taxpayer is a/an:
LESS: COS
NET SALES a. Individual
LESS: OSD 40% GROSS INCOME
b. Corporation
OTHER INCOME
NET INCOME
OTHER INCOME TOTAL TAXABLE INCOME
B. CORPORATION
LESS: OSD 40%
TOTAL TAXABLE INCOME GROSS SALES P 1,000,000
NET TAXABLE INCOME LESS: COS 800,000
GROSS INCOME P 200,000
LESS: OSD (40% x P200K) 80,000
TAXABLE INCOME P 120,000

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