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1. min wage earners in private sector and others earning statutory min wage
2. Compensation income of employees in public sector not exceeding statutory min wage in non agri priv sector
Included in gross compensation income:
1. Salary, wage, fee
2. Commission (taxable even if min wage earner)
3. Honoraria (taxable even if min wage earner)
4. Allowance (allow rcvd by prv employees are subj to w/holding tax in general UNLESS ordinary and necessary
RATA and if liquidated. Personnel economic relief allow is non taxable)
5. 13th month and other benefits eg. xmas bonus, loyalty awards, gifts in cash or in kind (amount exceeding 82k only
is taxable)
6. Holiday pay, overtime, night shift, hazard/emergency pay (min wage earners are exempted unless they receive
other income or receives addtl compensation such as honraria, fringe, commission, benefits in excess of 82k, and
other taxable income) NOTE: hazard pay not qualified to be classified as one is TAXABLE even if given to min wage
earners
7. Separation pay (taxable if voluntarily done. Nontaxable if INVOLUNTARILY done)
8. Retirement pay (NONTAXABLE if: from ss or gsis, and if ALL of the ff. are complied: A) Retirement has been
approved by BIR
Been connected to the company for at least 10 yrs C) Retiree shud be at least 50yo D) Availed
retirement for the first time E) Retirement plan is fair to all employees REGARDLESS OF POSITION)
9. Sick leave/vacation leave (if unused vaca leave is 10days or less, it is not subj to tax or w/hold tax, see letter A of
de minimis)
10. Tips and gratuities paid directly to an employee
* Taxable
* Not subject to witholding
11. Fringe benefits
* If rank-and-file, subject to basic tax
* If managerial or supervisory, subj to final tax
Retirement benefits exempt from taxation:
1. If the conditions above were satisfied
2. Received due to sickness, death, physical/mental disability beyond control of employee
3. SSS
4. GSIS
5. Prems borne by employer for GROUP insurance of employees
6. Retirement benefits and etc received from foreign govt agencies
Fringe benefits include:
1. Living quarters and meals (see deminimis)
* Living qrts and meals exclusive for the convenience of EMPLOYER - nontaxable
* Living qrts and meals provided w/in the business premises - taxable
* Living qrts and meals provided to military offcls of AFP - nontaxable
2. Expenses incurred by employee (personal expenses)
3. Vehicle
4. Insurance premium
* Company is the beneficiary - nontaxable
* Beneficiary is the family - taxable if rank and file, subj to fringe tax if manager or supervisor
5. Payment of income tax
* rank and file - added to compensation income
* Manager or supervisor - subject to fringe tax
6. Those exceeding de minimis benefits
De minimis benefits:
A. Monetized unused vaca leave credits of private employees not exceeding 10 days
B. Monetized val of vaca and sick leave credits to gov offcls and employees
C. Med cash allow to dependents of employees not excding 750/employee per sem or 125/month (1500 yr)
D. Rice subsidy of 1500/mo
E. Uniform and clothing allow not exceeding 5k per annum
F. Med asstnce, med allow, annual med checkup not more than 10k
G. Laundry allow not more than 300/mo
H. Employee achvmnt award of tangible personal prop valued not more than 10k
I. Gifts during xmas and major anniv celebs not more than 5k per employee per annum
J. Daily meal allow not more than 25% of basic min wage on a per region basis
If mulapas ang deminimis sa ceiling, maadto sya sa 13th month tas katong 82k iminus IN TOTAL NA AS PART NA
SYA SA BONUS AND OTHER CHUCHU. Fringe benefits also forms part of the 82k ceiling.