Business

Mathematics
Salaries and Wages (Taxable and
Nontaxable Benefits)
 Taxable Benefits
O A benefit is taxable if there is a need to pay a
portion of that benefit as income tax, which is
usually withheld or deducted from the basic
salary.

Based on the new Tax Law signed in early

2015, cash benefits such as 13th month pay
(on top of the basic salary) which exceed
PHP82,000 are taxable.
•For the following cash compensations, any amount in
excess of PHP82,000.00 is taxable.

PERA PHP24,000.00

13th month pay PHP42,000.00

Productivity Enhanced PHP5, 000

Incentive
PBB PHP15,000

This means that the taxable amount is:

(24,000 + 42,000 + 5,000 + 15,000) – 82,000
= PHP 4,000
 Nontaxable Benefits
O Tax Exempt De Minimis Benefits to Employees

Monetized unused vacation leave credits of private

employees not exceeding 10 days during the year.

Monetized value of vacation and sick leave credits paid to

government officials and employees.

Medical cash allowance to dependents of employees, not

exceeding Php 750 per semester or Php 125 per month.
 Nontaxable Benefits
O Tax Exempt De Minimis Benefits to Employees

Rice subsidy of PHP1,500 or one 50-kilogram sack of rice

per month amounting to not more than PHP 1,500.

Uniform and clothing allowance not exceeding PHP5,000

per annum

Actual medical assistance, e.g. medical allowance to cover

medical and healthcare needs, annual/executive check-
up, maternity assistance, and routine consultations, not
exceeding Php 10,000 per annum.
 Nontaxable Benefits
O Tax Exempt De Minimis Benefits to Employees

Laundry allowance not exceeding PHP300 per month.

Employees achievement awards, e.g. for length of

service or safety achievement, which must be in form
of tangible personal property other than cash or gift
certificate, with an annual monetary value not
exceeding PHP10,000 received by an employee
received by the employee under an established
written plan which does not discriminate in favor of
highly paid employees.
 Nontaxable Benefits
O Tax Exempt De Minimis Benefits to Employees

Gifts (may be in cash or in kind) given to employees during

Christmas and major anniversary celebrations not
exceeding PHP 5,000 per employee per annum.

Daily meal allowance for overtime work and

night/graveyard shift not exceeding 25% of the basic
minimum wage on a per region basis.
 Nontaxable Benefits
O Tax Exempt De Minimis Benefits to Employees

Benefits received by an employee by virtue of a collective

bargaining agreement (CBA) and productivity incentive
schemes provided that the total monetary value received
from both CBA and productivity incentive schemes
combined do not exceed PHP10,000 per employee per
taxable year.
 The following are non-taxable:
Rice Allowance
(up to a maximum amount of PHP1,500  12 = PHP18,000 per
year is non-taxable)
Clothing Allowance
Monetized Leave Credits
Signing Bonus
(Only PHP10,000 is nontaxable, the excess of PHP5,000 will
be added to the taxable income since this is given by virtue of
CBA.)
Grocery Allowance – this amount was given as part of the
Christmas gift so this is non-taxable.

(source: http://taxacctgcenter.org/tax-exempt-de-minimis-benefits-to-employees/)
 Taxable Benefits
O Withholding Tax
O Philhealth
O PAG-IBIG/SSS Loan
O Charges/miscellaneous
O SSS Premium
O PAG-IBIG
O Retirement fund
 Identify if each statement is Taxable or
Nontaxable
1. All allowances are non-taxable.
2. If the monthly clothing allowance is P400.00, then the
taxable amount for clothing allowance is P1,200..
3. Allowances are considered part of earnings.
4. Non-taxable benefits includes all monetized leave credits.
5. Some bonuses or allowances are non-taxable.
6. All benefits of government officials and employees are non-
taxable.
7. Taxes are added in the deduction.
8. 13th month pay may or may not be taxed.
9. If the deduction is 0, then it follows that gross earning is
taxable.
10. There is a possibility that a certain employee will be
exempted from tax even if he/she receives some benefits.