TAXATION

INCOME TAX
PAYROLL

A payroll is a calculation of all employee’s compensation, statutory contributions, taxes, deductions,

and net payment for a certain time period. The formal document to present payroll is called a payroll
register.
PAYSLIP

A payslip is a document that explains the components of an individual’s pay for a

certain time period. It is a “personal” version of a payroll register.
RELEVANT
STATUTORY
CONTRIBUTIONS
RELEVANT
STATUTORY
CONTRIBUTIONS
RELEVANT
STATUTORY
CONTRIBUTIONS
RELEVANT STATUTORY CONTRIBUTION
 BASIC TECHNIQUES IN PAYROLL CALCULATION
Step 1. Compute for the gross pay by getting the Step 2. Compute for the taxable income (basis
total earnings. for withholding tax)
Basic pay xx,xxx Gross pay xx,xxx
Less: Lates and absences (xxx) Less: SSS EE Contribution (xxx)
Add: Overtime x,xxx Less: PHIC EE Contribution (xxx)
Add: Other taxable income x,xxx Less: HDMF EE Contribution (xxx)
Add: Other nontaxable income x,xxx Less: Other nontaxable income (x,xxx)
GROSS PAY xx,xxx TAXABLE INCOME xx,xxx

Step 3. Compute for the total deductions. Step 4. Compute for the net pay using all
SSS EE Contribution xxx earnings deducted by all deductions.
PHC EE Contribution xxx Gross pay xx,xxx
HDMF EE Contribution xxx Less: Total deductions (x,xxx)
Withholding Tax xxx NET PAY xx,xxx
Other deductions xxx
TOTAL DEDUCTIONS xxx
QUIZZER Basic pay 57,500.00
Less: Absences (2,205*2) (4,410.00)
Peony Kobenhavn, an international content developer, Add: Overtime ((276*1.25*4.5) 1,552.50
enjoys a monthly basic pay of P57,500 in which the daily Add: Other taxable income 3,000.00
rate is P2,205 and an hourly rate of P276. Non taxable Add: Other non taxable income 2,500.00
benefits amounted to P2,500 while taxable benefits GROSS PAY 60,142.50 (a)
amounted to P3,000. During the month, Peony had two
Gross pay 60,142.50
days of absence. Overtime during the period is a total of
Less: SSS EE Contribution (800.00)
4.5 hours*. Peony availed the company lanyard
Less: PHIC EE Contribution[(57,500*3%)/2] (862.50)
amounting to P150 to be deducted to his salary.
Less: HDMF EE Contribution (100.00)
Less: Other nontaxable income (2,500.00)
Compute for the following:
TAXABLE INCOME 55,880.00 (b)
a. Gross pay
b. Taxable Income Minimum tax 2,500.00
c. Total deductions
25% tax on excess (55,880 – 33,333)*25% 5,636.75
d. Net pay
Withholding tax for the month 8,136.75
*Please take note that the overtime rate for an ordinary
SSS EE Contribution 800.00
day is plus 25% of the hourly rate.
PHIC EE Contribution 862.50
HDMF EE Contribution 100.00
Withholding Tax 8,136.75
Other deductions 150.00
TOTAL DEDUCTIONS 10,049.25 (c)
Gross pay 60,142.50
Less: Total deductions (10,049.30)
Net Pay 50,093.25 (d)