TAXABLE DE MINIMIS BENEFITS

1. Excess de minimis over their regulatory limits

2. Other benefits of relatively small value that are not included in the list of de minimis
benefits.

TREATMENT OF TAXABLE DE MINIMIS BENEFITS

a. For rank and file employees – taxable de minimis is treated as other compensation income
under the category “13th monthly pay and other benefits.
b. For managerial and supervisory employees – the taxable de minimis is treated as fringe
benefit subjected to final fringe benefit tax.

DETERMINATION OF EXCESS DE MINIMIS BENEFITS

Illustration 1: De minimis limits

Alexandria, a private employee who is paid a P600 daily rate, receives the following benefits during
the year 2021:

Monetized unused vacation leave credits 9 days

Monetized unused sick leave credits 9 days
Medical assistance P 7,000
Rice subsidy (P2, 500 per month) 30,000
Clothing allowance 9, 000
Laundry allowance 6, 000

Required: Determine the taxable amount of de-minimis benefits.

Solution:
ACTUAL LIMIT EXCESS
Monetized unused VL P 5, 400 P 6,000 P 0
Monetized unused SL 5, 400 0 5, 400
Medical assistance 7, 000 10, 000 0
Rice subsidy 30, 000 24, 000 6, 000
Clothing allowance 9, 000 6, 000 3, 000
Laundry allowance 6, 000 3, 600 2, 400
Taxable de minimis as “other benefits” P 16, 800
Illustration 2:

Hazelyn, a government rank and file employee, received the following benefits:

Monetized unused vacation leave credits (10 days) P 6, 000

Monetized unused sick leave credits (15 days) 9, 000
Uniform allowance 5, 000
Laundry allowance 4, 800

Required: Determine the amount to be included in other benefits.

Solution:
ACTUAL LIMIT EXCESS
Monetized unused VL P 6, 000 except P 0
Monetized unused SL 9, 000 except 0
Uniform allowance 5, 000 6, 000 0
Laundry allowance 4, 800 3, 600 1, 200
Taxable de minimis as “other benefits” P 1, 200

Illustration 3:

Professor Estoque was one of the Hall of Fame awardees of Youbee University. He was granted
P25, 000 cash as loyalty award for his 30 years of service. He was also given P10, 000 Christmas gift
and an additional P10, 000 gift during the institution’s Founding Day Anniversary. Besides, he was
also given free lunch meals with the total value of P15, 000 during the same year.

Required: Compute the total taxable de-minimis benefits as other benefits.

Solution:
ACTUAL LIMIT EXCESS
Loyalty or service award P 25, 000 P 0 P 25, 000
Christmas and anniversary gift 20, 000 5, 000 15, 000
Meals 15, 000 0 15, 000
Taxable de minimis as “other benefits” P 55, 000

In all three illustration, if the employee is a managerial or ---------- employee, the entire excess de
minimis shall be considered as other -------- benefits subject to fringe benefits tax.

Note:
Many follow the practice of treating excess de-minimis benefits as part of 13 th pay and other
benefits regardless of whether the employee is a managerial supervisory or rank and file. This
treatment is based on the erroneous use of ------- phase “income tax as well as withholding tax on
compensation income” in the section ----- of RR5-2011. This inadvertence was subsequently clarified
and corrected by the Commissioner Henares as “Fringe benefits tax” under RMC20-2011. It must be
clarified therefore that the excess de-minimis benefits of managerial ---- supervisory employees is
subject to final fringe benefit tax and is not part of 13th month pay and other benefits.