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Partnership Reviewer

1. There are two types of partnerships for tax purposes: general professional partnerships (GPPs) and general partnerships. GPPs involve a common profession like law or auditing, while general partnerships involve trade or business. 2. For GPPs, a partner's net distributive share is taxed at 10% if the share is less than or equal to 720k pesos, and at 15% if the share is greater than 720k pesos. The partnership's income is taxed separately at 30% before determining each partner's distributive share. 3. For general partnerships, each partner's gross income is reduced by operational expenses to determine taxable income. Taxable income is then

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Xeleen Elizabeth Arca
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343 views2 pages

Partnership Reviewer

1. There are two types of partnerships for tax purposes: general professional partnerships (GPPs) and general partnerships. GPPs involve a common profession like law or auditing, while general partnerships involve trade or business. 2. For GPPs, a partner's net distributive share is taxed at 10% if the share is less than or equal to 720k pesos, and at 15% if the share is greater than 720k pesos. The partnership's income is taxed separately at 30% before determining each partner's distributive share. 3. For general partnerships, each partner's gross income is reduced by operational expenses to determine taxable income. Taxable income is then

Uploaded by

Xeleen Elizabeth Arca
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Partnership – a contract between 2 or more persons General Professional Partnership:

that contribute money, property, and industry to a


1 – NET DISTRIBUTIVE SHARE OF ONE PARTNER IN
common fund and share profits and responsibilities
THE INCOME OF PARTNERSHIP (GENERAL
among themselves.
PROFESSIONAL PARTNERSHIP)
2 Kinds of Partnerships for Tax Purposes:
1. General Professional Partnership (GPP)
➢ Exercise common profession
➢ Examples: Law Firm, Auditing Firm, etc.
➢ Income Payments to Partners of GPPs:
o 10% if less than or equal to 720k
o 15% if more than 720k
➢ Ang 4:3:2:1 ay ratio na equivalent sa 40%,
2. General Partnership
30%, 20%, and 10% P/L respectively.
➢ Trade and Business ➢ Kasama ang “Other Income Subject to Final
➢ RCIT 30% Tax (Net)” sa Total Distributable Income of
the GPP bilang ta-tax-an at hahatiin dahil
Distribution of Shares:
maiiwan iyon sa partnership.
➢ 10% or 20% - Dividend Income ➢ If less than or equal to 720k, 10% ang
o Dividend Income – Final Tax gagamitin sa Distributive Share of a Partner.
➢ If more than 720k, 15% ang gagamitin sa
Formula for Net Income:
Distributive Share of a Partner.
➢ Net Income = Taxable Net Income – Tax Due ➢ Ang Creditable Withholding Tax ay sa dulo pa
➢ Net Income = Taxable Net Income x 70% ibabawas bago mag-derive sa Net.

Separate Entity Theory: 2 – TAXXABLE INCOME AND INCOME TAX PAYABLE OF


ONE PARTNER (GENERAL PROFESSIONAL
➢ Partnership Income Tax – 30% of Taxable Net
PARTNERSHIP)
Income
➢ Partners – 10% or 20%
GP – Final Tax of 10%
GPP – ITR (with CWT)

Example Exercises:
➢ Hindi isasama ang Income Subject to Final Tax
(Net) sa Distibutive Income of GPP dahil
magkakaroon ng double taxation since ia-
graduated rates pa.
➢ Graduated Rates ang gagamitin pero sa Total
Taxable Income pa gagawin.
➢ Ibabawas din dito ang Creditable
Withholding Tax after ma-Graduated Rates at
doon pa lang magde-derive sa Income Tax
Payable.
General Partnership: 5 – TAXABLE INCOME AND INCOME TAX DUE OF ALL
PARTNERS (GENERAL PARTNERSHIP)
3 – NET DISTRIBUTIVE SHARE OF ONE PARTNER IN
THE INCOME OF PARTNERSHIP (GENERAL
PARTNERSHIP)

➢ Less lang ang Operational Expenses ng bawat


partner sa kanilang sariling Gross Income.
After that, tingnan kung applicable i-apply ang
Graduated Rates.

➢ Ang Taxable Net Income ay subject sa RCIT na


30%.
➢ Ang “Other Income Subject to Final Tax (Net)
ay kasama at ia-add pa lang kapag na-tax-an na
ang Net Income.
➢ Ang Dividend Income ay subject sa 10% Final
Tax kapag nakuha na ang Distributive Share of
One Parent.
4 – FINAL TAX AND NET DISTRIBUTIVE SHARE OF
EACH PARTNER FROM THEIR SHARE IN INCOME
PARTNERSHIP (GENERAL PARTNERSHIP)

➢ Ang Total Distributable Income of the GPP ay


subject lahat sa partners ng partnership. Dito
kukunin ang share ng bawat isa gamit ang ratio
na 4:3:2:1 or 40%, 30%, 20%, and 10%
respectively. After niyan, may Final Tax na 10%
pa at iyon na ang Net Distibutive hare of
Partners.

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