Income Taxation - CPAR Test Bank Notes

Income Taxation - CPAR Test Bank Notes

• Taxation vs. Police Power/Eminent Domain: Taxation is a power exercised by the government to raise funds for general welfare. Police power is used to regulate health, safety, and morals. Eminent domain is the power to take private property for public use with just compensation.

• Constitutional Limitations on Taxation: Laws must be uniform and equitable. There are exceptions for charitable institutions, cemeteries, religious organizations, and educational institutions. Imprisonment for tax non-payment is prohibited in certain cases. Contract impairment is also a limitation.

• Public Purpose Requirement: Taxes must be imposed for public purposes, not private ones, such as national defense or public education.

• Essential Characteristics of a Tax: A tax must be enforced, paid in money, and not limited in amount.

• Special Assessment: This is a proportional contribution from land owners especially benefited by public improvements. A special assessment's characteristics include being levied on land and benefiting the assessed land owner. It isn't a personal liability of the property owner.

• Tax Incentives/Exemptions: These are privileges of not having a financial obligation to which others are subject.

• Legislative Power to Tax: Given no constitutional restrictions, Congress has discretion in the methods and persons it taxes as long as the purpose is public.

• Place of Taxation: Factors like source of income, citizenship, and residence of the taxpayer play a role in determining where a tax is applied.

• Nature of Taxation: Taxation involves legislative actions, administrative functions, and the payment of taxes in money.

• Constitutional Limitations on Taxation: The limitations include rule of uniformity and equity, non-impairment of contract obligations, and limitations on the use of public funds. (Note: Several other limitations exist and are not explicitly listed/repeated here).

• Taxation is an Inherent Power: The state inherently has power to tax, and no formal constitutional grant is usually required.

• Distinction between Tax and License Fees: Taxes are for raising revenue, and license fees cover the cost of regulation or are tied to the privilege to engage in a specific activity.

• Tax Shifting: This is the transfer of tax burden to another party.

• Tax Avoidance/Evasion: Tax avoidance uses legal means, while tax evasion uses illegal means to reduce or avoid paying taxes.

• Types of Taxes: Different types of taxes are discussed in the test bank, such as direct, indirect, ad valorem, and excise taxes.

• Taxation principles: Several principles underlining a sound tax system are outlined in the document, such as fiscal adequacy, equality, administrative feasibility, and intellectual sensitivity.

• Specific Types of Taxes and their characteristics: The text introduces various specific taxes, with examples and notable features.

• Individual Taxpayers: It provides details on the classification of individuals as resident citizens, non-resident citizens, resident aliens, and non-resident aliens for tax purposes within the context of the Philippines. Rules regarding their eligibility for exemptions and liabilities are also presented.

• Corporate Taxation: The document examines rules regarding corporate taxation (domestic vs. foreign), corporate income tax, including exemptions, and relevant filing procedures.