INCOME TAXATION NOTES (11)

 In general, a de minimis benefit is one for which, considering its value and the frequency
with which it is provided, is so small as to make accounting for it unreasonable or
impractical.
 The de minimis benefits are any benefits given to the employees by the employee, which
are mandated by law. In the computation of taxable income for the employee,
any excess beyond the allowable amount of 90,000 tax exemption Philippines will
be part of the taxable income.
 The de minimis benefits are any benefits given to the employees by the employee, which
are mandated by law. In the computation of taxable income for the employee, any
excess beyond the allowable amount of 90,000 tax exemption Philippines will be part
of the taxable income.
 Payment of 13th-month Pay. - All employers covered by Presidential Decree No. 851,
hereinafter referred to as the "Decree" , shall pay to all their employees receiving a
basic salary of not more than P1,000 a month a thirteenth-month pay not later than
December 24 of every year.
 You claim a treaty exemption that reduces or modifies the taxation of income from
dependent personal services, pensions, annuities, social security and other public
pensions, or income of artists, athletes, students, trainees, or teachers. This includes
taxable scholarship and fellowship grants.
 Stated otherwise, an employer-employee relationship exists where the person for whom
the services are performed reserves the right to control not only the end to be achieved
but also the means to be used in reaching such end.
 Gross compensation income is defined as taxable income arising from an
employer/employee relationship and includes the following: salaries, wages,
compensation, commissions, emoluments, and honoraria. bonuses and other benefits
exceeding PHP90,000.
 Business Income is the profit that is earned from the business. It is nothing but Total
Revenue/Total turnover minus Total Expense.
 What is the proper minimum wage for employees in the private sector in Metro
Manila? ... As regards your second question, minimum wage earners shall be
exempted from payment of income tax on their taxable income.
 In other words, the income tax exemption of minimum wage earners covers only
their basic pay (statutory minimum wage), overtime pay, holiday pay, night shift
differential pay, hazard pay, and the non-taxable benefits up to a maximum amount of
Php90,000.
 What is taxable income? Taxable income or gross income or adjusted gross income
includes salaries, wages, bonuses, etc. along with unearned income and investment
income. It is the amount that will be used to determine your tax liability.
 Fringe benefit tax (FBT) was a form of tax that companies paid in lieu of benefits
they offered their employees in addition to the compensation paid to them. ... This
tax was paid in addition to income tax, irrespective of whether or not the company had
income-tax liability.
  Fringe benefits are perks and additions to normal compensation that companies give
their employees, such as life insurance, tuition assistance, or employee discounts. If a
fringe benefit is transferred as cash, such as a bonus or reimbursement for travel or
other expenses, they are likely to be subject to income tax.
 Exempt reportable fringe benefits are any reportable fringe benefits received from a
not for profit organisation which is eligible for a fringe benefits tax exemption under
section 57A of the Fringe Benefits Tax Assessment Act 1986.
 To calculate an employee's fringe benefit rate, add up the cost of an employee's fringe
benefits for the year (including payroll taxes paid) and divide it by the employee's
annual wages or salary. Then, multiply the total by 100 to get the fringe benefit rate
percentage.

Examples of taxable fringe benefits include:

 Bonuses.
 The value of the personal use of an employer-provided vehicle.
 Group-term life insurance in excess of $50,000.
 Vacation expenses.
 Frequent-flyer miles earned during business use, converted to cash.
 Amounts paid to employees for relocation in excess of actual expenses.

What is convenience of the employer rule?

For example, New York uses the "convenience of the employer rule," which requires
employers to withhold income taxes on wages for employees who are assigned
to a New York office, yet perform their services out of state for their own convenience
rather than the employer's necessity.

 A hybrid costing system is a system used by businesses that combines job order
activities as well as process costing activities. Hybrid costing often refers to operation
costing which is used in the production of goods.
 Understand the difference between personal and business expenses. ... Any expense
that is directly linked to your business earning an income is a business expense. If you
buy something to be used for your business, it's a deductible business expense. If you
buy something to use privately, that's a personal expense.
 Manufacturing costs are the costs incurred during the production of a product.
These costs include the costs of direct material, direct labor, and manufacturing
overhead. The costs are typically presented in the income statement as separate line
items. An entity incurs these costs during the production process.
 Acquisition cost refers to an amount paid for fixed assets, for expenses related to the
acquisition of a new customer, or for the takeover of a competitor. It is useful in
identifying the full cost of fixed assets because it includes items such as legal fees and
commissions and removes discounts and closing costs.