Name: Shane Nicole S.

Pepito Subject: Business Mathematics

Grade Level: 12 Teacher: Ms. Mary Grace G. Inot

Gross and Net Earnings, Benefits of Wage Earners, and Taxable and Non-Taxable Benefits
MODULE

I. Objectives
1. To let the students know and understand the subject at hand.
2. To make the students like the topic.
3. To give joy and happiness to the students through my report.

II. Subject Matter

A. Topic
- My report is all about Gross and Net Earnings, Benefits of Wage Earners, and
Taxable and Non-Taxable Benefits.
- Gross and Net Earnings wherein we will define salary and earnings, differentiate
gross from net, and compute gross and net earnings.
- Benefits of Wage Earners wherein we will define wage and benefits, enumerate
the benefits of a wage earners, and define each of the benefits given to a wage
earner.
- Taxable and Non-Taxable Benefits wherein we will distinguish taxable from non-
taxable benefits, and enumerate the standard deductions with the
corresponding computations.

B. References

- Business Mathematics Book

C. Values

- Through my report, I want the students to know and understand the 3 topics I
will share.
- I expect that the students will give their full cooperation during my reporting so
that they will have better understanding at the topic at hand.
 - I expect that they will ask questions to the reporter when they have something
they don’t understand.
- I hope that they will have fun.

III. Discussion

A. Gross and Net Earnings

Salary – is a fixed regular payment, typically paid on a monthly or biweekly basis but
often expressed as an annual sum, made by an employer to an employee.
Deduction – is the amount held by an authority as a form of payment for some
necessary dues like taxes, loans, etc.
Net Earning – is the amount earned by any person less the total deductions.
Gross Earning – is the amount earned by any person before subtracting the taxes,
benefits, loans, and other possible deductions.

FORMULA

Let E be the total earnings, D be the total deduction, and N be the monthly net.
The equation

E=D+N

Holds for all non-negative numbers E, N, and D.

N=E–D

D=E-N

B. Benefits of Wage Earners

Wage – a fixed regular payment, typically paid on a daily or weekly basis, made by
an employer to an employee, especially to a manual or unskilled worker, it is the
part of a total production that is the return to labour as earned income, as distinct
from the remuneration received by capital as unearned income.
Income – money received, especially on a regular basis, for work or through
investments.
Benefit – a payment or gift made by an employer, the state, or an insurance
company.
 BENEFITS OF WAGE EARNERS

1. Long-term benefits: retirement, death, disability, dependent’s allowance.

2. Minimum wage earner tax exemption
3. Bonuses and allowances (e.g. travel, rice, meal, clothing, and laundry)
4. 13th month pay, holiday pay, special pay, overtime pay, night shift differential,
and hazard pay.
5. Leave incentives: sick, maternity, paternity, solo parent, and others

6. Health-related benefits and insurances.

FORMULA

1. Retirement Benefit
The minimum retirement pay is given by
R = 22.5 x P x T
R is the retirement pay, P is the daily rate, and T is the number of years
served.

2. 13th-Month Pay
Let x be the annual basic salary of any employee. The 13th month pay of
any employee must be at least 1/12 of x.

3. Maternity Benefit
Let x be the annual monthly salary of the employee. Then 2.6x and 2x
for caesarean and normal delivery, respectively.

4. Holiday Pay
Holiday pay refers to payment of the regular daily wage for any
unworked regular holiday, Note that if the employee worked on the
holiday, then he will receive twice his daily wage.
C. Taxable and Non-Taxable Benefits

De Minimis – non-taxable benefits.

As stated in the Revenue Regulation No.5 – 2011, the following benefits are non-
taxable. (DE MINIMIS BENEFITS)

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 officials
and employees.
3. Medical cash allowance to dependents of employees, not exceeding P750 per
employee per semester or P125 per month.
4. Rice subsidy of P 1,500 or one (1) sack of 50 kg of rice per month amounting to
not more than P 1,500.
5. Uniform and clothing allowance not exceeding P 4,000 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 P 300 per month.
7. Laundry allowance not exceeding P 300 per month.
8. Employees achievement awards, e.g. for length of 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 P10,000 received by
the employee under an established written plan which does not discriminate in
favour of highly paid employees.
9. Gifts given during Christmas and major anniversary celebration not exceeding P
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.

After identifying taxable benefits from not and knowing that tax is one of the
standard deductions, we now proceed on enumerating deductions in the payslips
provided above. It can be noticed in the following:

1. Withholding Tax
2. SSS Premium
3. Philhealth
 4. PAG-IBIG
5. PAG-IBIG/SSS Loan
6. Retirement Fund
7. Charges/ Miscellanous

These are some standard deductions for a wage earner. Withholding tax is the
amount contributed by any wage earner to the government. The SSS (Social Security
System) or GSIS (Government Services Insurance System, the equivalent government
agency for SSS) collects annual/quarterly/monthly contributions from its members
to ensure that they will receive their benefits. Philhealth and Pag-Ibig are almost the
same with SSS/GSIS only that Philhealth focuses more on providing discounts when
it comes to health-related problems, while Pag-Ibig Fund focuses on providing loans
for lands or mortgages. Charges/Miscellanous can be best interpreted as deductions
made by the employer for some other reasons (e.g. tardiness/absences).

IV. Evaluation

QUIZ
Solve for the value in the following problems:

1. IF D = P 2,122.00 and N = P 17,517.29, what is the value of E?

2. Find the value of E given that the value of D is P 1,423.16 and N = P 18,211.12.
3. Sarah receives a net earning amounting to P 17, 827.43. If she receives a total
earning of P 21, 924.13, then how much will she receive as her total deduction?
4. If E = P 72, 130.22 and D = P 28, 875.21, what is the value of N?
5. Tina is paid a weekly salary of P 7,000. How much would Tina earn in 5 weeks of
work?
6. Tom has a monthly net amounting to P 12,614.62. If he receives a total deduction of
P 5,438.15, then how much will he receive as his total earning?
7. Robert worked in the following schedule for one week: Monday, 7 hours; Tuesday,5
hours; Wednesday, 8 hours; Thursday, 9 hours; Friday, 4 hours. He was paid P 52.25
an hour. How many hours did Robert work that week and what was his gross pay?
8. If E = P 28, 091.16 and N = P 11, 213.00, what is the value of D?
9. If D = P 17,122.05 and N = P 21, 318.29 , what is the value of E?
10. Kenneth works as a shopping mall security guard and is paid P 50 an hour. Find his
gross pay when he works 53 hours a week.
 Bonus Question (TRUE OR FALSE)
- If the Deduction is 0, then Gross Earnings = Net Earnings.
- The total deduction is always equal to the net earnings.

V. Assignments (TRUE OR FALSE)

1. If the deduction is more than the net earning, then the net earning is more than half
of the gross earning.
2. Taxes are added in the deduction.
3. Net Earning can be greater than the gross earning.
4. Overtime pay is the part of the deduction.
5. Other benefits and Payments of Loans are deducted from the Gross.
6. All wage earner can avail all benefits of any wage earner.
7. 13th month pay is equivalent to 1/13 annual salary of any employee.
8. A pregnant employee may not have a maternity leave benefit.
9. Retirement Benefit can only be availed if the age of the employee is more than or
equal to 60 years old.
10. Living allowance is a must benefit given to all employees.
11. All allowances are non-taxable.
12. 13th month pay may or may not be taxed.
13. All benefits of government officials and employees are non-taxable.
14. There is a possibility that a certain employee will be exempted from tax even if
he/she receives some benefits.
15. If the monthly clothing allowance is P400.00, then the taxable amount for the
clothing allowance is P1,200.