Balance Sheet and Tax

• Personal finance, also known as personal financial planning, is the process of managing your money to achieve your financial goals effectively.
• Personal financial planning involves creating a plan for your income and expenses to manage your money effectively.
• There are two types of personal financial statements: the income statement and the balance sheet.
• The four major categories of taxes discussed are income, property, sales, and excise.
• The purpose of taxation in the context of public finance is to raise revenue for the government.
• A key part of budgeting is estimating your typical monthly expenses.
• Underestimating expenses can lead to a shortage of cash inflows to cover cash outflows.
• Tax planning involves strategies to minimize your tax liabilities legally.
• Proper tax planning can reduce your tax burden, leaving more money for savings and investments.
• Identify your income sources such as salary, wages, etc.
• The Bangko Sentral ng Pilipinas (BSP) was established on 3 July 1993 pursuant to the provisions of the 1987 Philippine Constitution and the New Central Bank Act of 1993.
• The PDIC’s core mandates are deposit insurance and liquidation of closed banks.
• PDIC is a government instrumentality created in 1963 by virtue of Republic Act 3591 to provide depositor protection and promote financial stability.
• PDIC is a socially responsible corporation which advocates to empower every Filipino through financial literacy.
• The PDIC prides itself as a professional, committed and responsive public service institution and a champion in governance.
• PDIC exists to protect depositors by providing deposit insurance coverage for the depositing public and help promote financial stability.
• The BSP took over from Central Bank of Philippines, which was established on 3 January 1949, as the country’s central monetary authority.
• The BSP enjoys fiscal and administrative autonomy from the National Government in the pursuit of its mandated responsibilities.
• Identify your assets, what you own, such as liquid assets (savings account, cash, etc.).
• Identify your liabilities, what you owe, such as Mortgage loans, etc.
• Identify your Net Worth, the value of what you own minus the value of what you owe.
• Managing liquidity is about having easy access to cash when needed.
• Money management involves making decisions about how much money to retain in a liquid form and how to allocate funds among short-term investment instruments.
• The 1987 Philippine Constitution sets limitations on the exercise of the power to tax.
• The Congress shall evolve a progressive system of taxation.
• Taxation's Role: Taxes are a financial charge or levy imposed by a government (or its functional equivalent) on individuals, businesses, or entities.
• Tax on Purchase includes Sales Tax and Excise Tax.
• Tax Avoidance is the use of legitimate methods to reduce one’s income.
• Tax Evasion is the use of illegal action to reduce one’s taxes.
• The revenue generated from taxation is used to fund government activities, including infrastructure development, public services, defense, and more.
• Donor’s Tax is a tax on a donation or gift, and is imposed on the gratuitous transfer of property between two or more persons who are living at the time of the transfer.
• Capital Gain Tax is a tax imposed on the profits presumed to have been realized by the seller from the sale or disposition of capital assets located within in the Philippines.
• Tax on Wealth includes Estate Tax and Inheritance Tax.
• Estate Tax is a Tax on the right of the deceased person to transmit his/her estate to his/her lawful heirs and beneficiaries at the time of death and on certain transfers, which are made by law as equivalent to testamentary disposition.
• Taxes consist of Direct and Indirect Tax.
• Tax on Earnings is imposed on the income from employment and other sources of income.
• Documentary Stamp Tax is a tax imposed on various documents, instruments, loan agreements, and papers that evidence the acceptance, assignment, sale, or transfer of obligations, rights, or property.
• The rule of taxation shall be uniform and equitable.
• Credit management involves making informed decisions about how much credit to obtain to support your spending and choosing appropriate sources of credit.
• Personal financial statements enable you to set financial goals and measure progress toward achieving them.