TAXABLE & NONTAXABLE

BENEFITS
LESSON 3
As stated in the amended Revenue
Regulation No. 11-2018 of the Bureau of
Internal Revenue, the following shall be
considered as “de minimis” benefits not
subject to income tax as well as withholding
tax on compensation income of both
managerial, and rank and file employees:
1.Monetized unused vacation leave credits
of private employees not exceeding ten
(10) days during the year.
2.Monetized value of vacation and sick leave
credits paid to government official and
employees.
3.Medical cash allowance to dependents of
employees, not exceeding ₱1,500 per
employee per semester or ₱250 per month.
4.Rice subsidy of ₱2,000 or one (1) sack of
50 kg. rice per month amounting to not
more than ₱2,000
5. Uniform and clothing allowance not exceeding
₱6,000 per annum.
6. Actual medical assistance, e.g. medical
allowance to cover medical and healthcare
needs, annual medical/executive check-up,
maternity assistance, and routine
consultations, not exceeding ₱10,000 per
annum.
7. Laundry allowance not exceeding ₱300 per month.
8. Employees achievement awards, e.g for length
service or safety achievement, which must be in
the form of tangible personal property other than
cash or gift certificate, with an annual monetary
value not exceeding ₱10,000 received by the
employee under an established written plan which
des not discriminate in favor of highly paid
employees.
9. Gifts given during Christmas and major
anniversary celebrations not exceeding ₱5,000 per
employee per annum.
10. Daily meal allowance for overtime work and
night/graveyard shift not exceeding twenty-five
percent (25%) of the basic minimum wage on a per
region basis
This means that if the “de minimis”
benefits exceeds on the stated amount,
then it is subject to tax.
The following are some standard deductions
of a wage earner.
1. Withholding Tax- amount contributed by
any wage earner to the government.
2. Philhealth- providing discounts when it
comes to health-related problems.
3.PAG-IBIG- providing monetary assistance
for lands or mortgages.
4.SSS Premium/ GSIS – collects
annual/quarterly/monthly contributions
from its members to ensure that they will
receive their benefits.
5. PAG-IBIG/SSS Loan
6. Retirement Fund
7. Charges/Miscellaneous-can be
deductions made by the employer for
some other reasons (e.g.
tardiness/absences).
Problem Solving
Example 1. Angela is a government employee
and has ten (10) days of sick leave credits and
eight (8) days of vacation leave credits. Her
daily rate is ₱490 and she only availed 2 days
of sick leave and 3 days of vacation leave. How
much will be her additional earnings and how
much of it will be taxed?
Problem Solving
Example 2. Marlon received Christmas
bonus of ₱10,000 from his employer.
How much of the bonus is taxable?
How much is his tax payable if his tax
percentage is 20%? How much will be
his net income from the bonus?
Problem Solving
Example 3. Anton was given living
allowance by his employer. His living
allowance includes clothing, laundry, daily
meal, and transportation. How much of the
additional earnings will be taxed if his living
allowance is ₱7,000 and each part in the
definition is 0.25 of the living allowance?
Problem Solving
Example 4. Marta’s earning has a tax
percentage of 20%. Twenty percent of his
total allowances comes from Christmas gifts,
all other allowances are not taxable, and his
total allowance is 14% of his basic pay (less
the allowance) which is ₱100,000. What is
his total earning and how much is his tax?
Seatwork #3:
Solve the given problems. COPY AND ANSWER.
1. Ms. Rica is a government employee and wanted to
monetize her unused sick and vacation leave. Suppose
she has unused leave credits of 22 days and her daily
rate is ₱650, how much will be her additional earnings?
2. Mr. Ramos worked in Company A. Suppose he received
a Christmas bonus of ₱12,000, how much of the bonus
is taxable? Considering his tax percentage is 20%, how
much is his tax payable for the said bonus? How much
is his net income form the bonus?