Money Magnets

In the National Internal Revenue Code (as amended by the Tax Reform Act of 1997) which contains the laws governing taxation in the Philippines, interest income from bank deposits is considered as a form of "passive income."  Therefore it is subject to a final tax of 20% which is withheld at the source (bank).  Exceptions to these are interests earned from deposits held in foreign currency units which are only subject to a  final tax rate of 7.5%.  Also, long-term investments of over five years are exempt from the tax.  

You've probably seen bank time deposit instruments that requires you to place your deposit for at least 5 years for it to be tax free.  If you have availed of this type of investment, in case you withdraw your deposit before the 5 year limit, your interest income will be taxed depending on the remaining time to maturity. 

               If held less than 3 years - 20% tax

               3 to 4 years - 12%

               4 to 5 years - 5%

sources: The New National Internal Revenue Code p. 58

             A.L. Pellas and Associates

I hope everyone will not be discouraged to invest or to save because of these taxes.  Generally, all forms of income are really taxable.  Whether you invest your money in the bank, the stocks, UITFs, Mutual Funds, and even on your own business, if it earns and generates a considerable amount of income for you, it will be taxable.    

It seems like most of our income really just goes to government.  A majority of our population though is very much dependent on our government for basic social services.  And believe it or not, our taxes (although maybe only a portion of it) do reach these groups of people.  Let's just think that by paying our taxes we are helping these groups of people indirectly.  It makes paying taxes not so much a burden.  Let's also be grateful that we are paying taxes because that means we are earning a considerable amount of money. (^o^)/  

YTD (Year to date) returns of Mutual Funds in the Philippines as of June 30, 2009.

    Primarily investes in Peso securities

1. Philequity Fund, Inc.                                         31.04%

2. Philippine Stock Index Fund Corp                    30.17%

3. Philequity PSE Index Fund Inc.                         28.63%

4. ATR KimEng Equity Opportunity Fund, Inc.     22.46%

5. Philam Strategic Growth Fund, Inc.                   22.01%

   Primarily invested in Peso securities

1. ALFM Growth Fund, Inc.                                    30.01%

2. First Metro Save and Learn Balanced Fund, Inc.  20.45%

If you don't see the performance of your Mutual Fund, check this site for the

complete list.

 

The last time I was in the supermarket, I was looking for brown sugar.  I normally purchase the 1 kilo packs at 25 pesos per pack.  On that shocking day, all the 1 kilo packs were sold out and what was left on the rack were only 1/2 kilo packs.  Since I had no choice, I hesitantly purchased the 1/2 kilo packs knowing that they may cost more than the 1 kilo packs.  I expected the 1/2 kilo packs to be selling at at around 12.50 - 13.00 pesos per pack.  To my surprise when the cashier punched the item on the register, the amount displayed was only 12.00 pesos!  My first reaction was "how can that be?!".  I simply didn't comprehend how buying smaller packs can be cheaper than bigger packs.  Buying the 1/2 kilo packs allows me to save 1 peso per kilogram of sugar!  This is quite significant for me because I normally average around 20 kilograms of brown sugar every month.  I use the sugar in making brownies and cupcakes which I sell for a profit.

Well, now I know better and you know better as well.  Sometimes, it pays to check the prices of similar items in different sizes. 

However, in the afternoon, the DoH also reported the first casualty of H1N1 here in the Philippines.  A 49 year old woman who has a preexisting heart condition presented flu like symptoms last June 17.  She died 2 days later, June 19.  It was only a day after her death that she was tested and found positive of Influenza A(H1N1).  She was reported to have self-medicated herself with only paracetamol.

This goes to show that although the H1N1 strain found here in the Philippines is of the mild variety, coupled with other diseases, the virus can be fatal!  If you are manifesting flu-like symptoms,  I think it would be best  to seek professional medical assistance right away.  

     

Personally, I will be preparing the Tiramisu!  The main course will be prepared by my uncle.  We are having a pot luck dinner at their place on sunday.

Happy Father's Day to my dad and to all dads out there!