Lazy Investing Way


Tuesday, January 16, 2018

Feeling the effects of Tax Reform

Tuesday, January 16, 2018 0

“Oh I love tax season,” Said no one ever!

On the first day of 2018, I jogged and after doing that looked to a bakeshop to get some Gatorade. The attendant informed me that prices have increased – but I was already expecting it. As I was heading back home I passed by some sari-sari stores with some softdrinks delivery person talking with the store owners about tax reform.

I was startled at first but was happy that people are actively immersed in the impacts of a law as well as discussing about their finances. This was the biggest surprise to me. I was eavesdropping a bit and they were discussing that it should take some time for the full implementation since old stocks (fuel, flavored drinks) should still be consumed before adjustments in the prices (transport, meals) are affected.

More on Income Tax Implementation:

Effective January 1, 2018, changes were implemented related to personal income taxes and PhilHealth premium contributions due to the new Tax Reform for Acceleration and Inclusion (TRAIN) law and PhilHealth’s revised contribution scheme, respectively.

Employers and businesses will have to comply with the Bureau of Internal Revenue (BIR) RMC No. 105-2017 entitled Revised Withholding Tax Table on Compensation in line with Republic Act No. 10963, otherwise known as the TRAIN law. The following changes were implemented:

A revised tax table with new income tax brackets and tax rates. Employees who earn up to Php250,000 annually will no longer pay any income tax, while those earning P8 million and above annually will be subject to a higher income tax rate. All other employees will be subject to lower income tax rates.

The revised tax table no longer considers the civil status of the taxpayer with the deletion of personal/additional tax exemptions for single or married individuals, heads of families and those with disabled or PWD (person with disability) dependents.

The tax-free threshold for 13th month pay and other bonuses increased from P82,000 to P90,000. Also, for companies providing fringe benefits to its employees occupying managerial and/or supervisory positions, there is an increase in the fringe benefit tax (FBT) rate from 32 percent to 35 percent effective as well.

For PhilHealth premium contributions, the Philippine Health Insurance Corporation (PHIC) issued Circular No. 2017-0024 to adjust the premium contributions of the employed sector to sustain the National Health Insurance Program (NHIP).

Beginning January 2018, PhilHealth monthly premium contributions, which are excluded from gross taxable compensation income, will increase from 2.5 percent to 2.75  percent of an employee’s monthly basic salary, based on a salary floor of P10,000 and ceiling of P40,000 (existing salary brackets had been removed). Contributions will remain equally divided between employee and employer.

Lastly, the deadline for filing the Quarterly Income Tax Return (BIR Form 1701Q) for the first quarter will be moved on or before May 15 of the same taxable year. On another note, for those availing of the installment payment for payment in excess of P2,000, the second installment payment shall be made on or before October 15 following the close of the taxable year.

This should be a very interesting year of adjustments in both people’s behaviors and businesses. I think people are fine paying the taxes provided it is easy and fair, but overall let’s wait and see.

I’m still hoping to have a more easy and automated way of paying and reporting taxes – even though for now it is but a fool’s hope!

Originally Published in Philstar - The Freeman Newspaper last January 16, 2018.
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Tuesday, January 09, 2018

Utilize the power of perspective

Tuesday, January 09, 2018 0

“The right perspective makes the impossible, possible!”

I’ve learned from a young age that two people can look at the exact same thing and see something totally different. I once asked 2 different groups (from different speaking engagements) a question: “Is there opportunities in the Philippines?” One group said “Plenty” while the other said “none”.

This is even more true today through the way we consume content via social media, especially regarding motivational videos, politics, money and/or even fake news.

I recently shared to a group of 10 people both who I know and don’t know (strangers) to share some turning points of my life. One of which was when I received the news that my mother had breast cancer. For an eldest child, at 14y.o., and an OFW father half way around the world – that was a very overwhelming experience.

Although my mom survived and is still living today, it was still a difficult time and topic for me to talk about verbally. I tried to figure things out all by myself and somehow managed to learn about this thing called ‘PERSPECTIVE’.

The ability to reframe a situation is an important skill that can transform your life and our world. All of us have the gift of perspective, but not all of us use it. Either we seek to practice it proactively or something external forces us to confront it face-to-face and sometimes we don’t even recognize it.

Remember a time when your perspective changed dramatically, such as falling in love or a death in the family. Immediately, your orientation and focus shifted. The world may have looked brighter, or dimmer. You may even have been prompted into action.

You don’t have to wait for something bad to happen to practice perspective, it could be in one’s daily activities. People or friends ask me why I do what I do – such as: running, going to the outdoors..etc.., and I tell them that not only is it about travel and fitness but also to practice the gifts that we all have: perspective, patience, gratitude, self-awareness and learner-mindset.

For me running or hiking is a stretch challenge – an opportunity to surpass myself. If I find myself in a stressful situation at work, I just recall my running or hiking accomplishments and immediately my stress goes away because my perspective shifted.

“Perspective is the difference between an ordeal and an adventure.”

Your experiences & viewpoint shapes your thoughts, decisions, actions — and ultimately the feeling of success. You can also use the perspective of others who are challenged by struggles that we’ve been spared from. As a result, we become better, more compassionate and appreciative human beings. We become wiser at heart, broader of mind, and become more grateful.

If you are experiencing something challenging right now, think about how you can shift your perspective. If you’ve lost your job, maybe it’s an opportunity to learn a new skill or turn your hobby into a business. If you are in debt, it’s time to change lifestyles reduce spending and spend more time with family. If you have health issues, perhaps you need to shift to a healthy life.

YOU CAN CHOOSE to either dwell on misfortunes or look at them as battle scars that made you better. This applies not only in business/finance, relationships, but also life in general.

“We either make ourselves miserable or happy, the amount of effort is the same.”

Originally Published in Philstar - The Freeman Newspaper last January 02, 2018.
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Monday, January 01, 2018

PH Tax Reform - Christmas Gift to Filipinos

Monday, January 01, 2018 0

Happy New Year!!!

It’s official, the Philippine Government finally updated our tax policies after more than 20 years!! Although you could still argue IT’S NOT PERFECT but it is a step in the right direction not only for funding the queueing government projects but also a relief to the overtaxed middle class of this country.

I wrote last November 8th that this Tax Reform for Acceleration and Inclusion Act (TRAIN) might be delayed, I was proven wrong. The Tax Reform was signed by our President Rodrigo Duterte on December 19, 2017 and vetoed some provisions right after.

LATEST UPDATE: The president has vetoed the following: (1) Php500k a year exemption for self-employed and professionals from percentage tax; (2) Earmarking of incremental tobacco taxes; (3) Exemption of various petroleum products from excise tax; (4) Zero-rating of sales of goods and services to separate customs territory and tourism enterprise zones; (5) Reduced income tax rate of employees of Regional Headquarters (RHQS), Regional Operating Headquarters (ROHQS), Offshore Banking Units (OBUS), and Petroleum Service Contractors and Subcontractors.

As I mentioned in my last tax reform write-up, “I’m more inclined to talk about the ‘actual’ collections with the use of technology across the tax collecting departments (BIR, Customs, SSS, Philhealth, Pagibig) to name a few examples.

Civil Service Salaries in tax collection departments may need to be updated and upgraded and perhaps even an incentive system to mitigate graft and corruption. Imagine you are a tax collector with a salary of 15-20k, tasked to collect millions. That sort of temptation is enormous and real (unless if you are a saint).”

A quick summary of the Philippine Tax Reform:
Income Tax
§  Current - Earning Php10k and below annually is taxed at 5% while those earning above Php500k is subject to 32%
§  TRAIN - Tax exemption for those earning Php250k annually while those earning above Php8M above is subject to 35%

Estate Tax
·         Current - Progressive rate at 5% with maximum of 20% but still subject to penalty fees and exemption of family home valued at Php1M
·         TRAIN - Flat rate of 6% and family home exemption valued up to Php10M

Tobacco Tax
·         Current – under the sin tax law, the projected tax rate will be Php31.20
·         TRAIN – transitional increase from 2018-2019 (Php35 from Jul 2018-Dec 2019; Php40 24 months) and 4% increase thereafter.

Tax on Sweetened Beverages
·         Current – None
·         TRAIN – Php6/liter for non/caloric sweeteners; Php12/liter for high-fructose corn syrup

Tax on New Vehicles
·         Current – 2% for up to Php600k; Php12k + 40% of excess over Php1.1M; Php512K + 60% of excess over Php2.1M
·         TRAIN – 4% for up to Php600K; 10% for Php600k to 1M; 20% for Php1 to 4M; 50% for above Php4M

Tax on Petroleum Products
·         Current – Zero for Diesel; while unleaded and premium gasoline is at Php4.35 per liter
·         TRAIN –
§  For Diesel
o   Php2.5/liter (2018)
o   Php4.5/liter (2019)
o   Php6/liter (2020)
§  For Gasoline
o   Php7/liter (2018)
o   Php9/liter (2019)
o   Php10/liter (2020)

Although some groups might see this measure as a negative, saying that the greater take home pay will be offset by the more expensive food and drinks and transport costs, it’s a matter of PERSPECTIVE. You either have a solution to every problem or always see a problem for every solution.

To me, this is an opportunity for Filipinos to be more financially educated by spending, saving and investing their money wisely. What’s your excuse?


Also Published in Philstar - The Freeman Newspaper last January 02, 2018.

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