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All Jurisprudence based

0 tracked cards Commercial and Taxation Laws

A resident Filipino, Jasmine Lim, wins PHP 260,000 cash prize in a nationwide private contest conducted by a media company. In the same year, she earns PHP 420,000 as salary from her employer. Which of the following statements best describes the tax treatment of these amounts under the NIRC?

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The PHP 420,000 salary is exempt from income tax if the year’s total compensation falls under a personal exemption cap. Prizes from private contests are taxed at a flat 20% final withholding tax, while salaries are taxed under the graduated rates. The FMV of the prize (if non-cash) is included in gross income, but the cash prize is excluded. Both the PHP 260,000 prize and the PHP 420,000 salary are included in her gross income under the NIRC; the prize is taxed as ordinary income at the applicable rates, and the salary is taxed as compensation.

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