Compensation Income Flashcards
Features of Employer-Employee Relationship
- Selection and engagement of employees
- Payment of wages
- Power of dismissal
- Power of control
Composition of compensation incom
- Regular compensation income-fixed benefits every payday
2 Supplemental compensation income 3. Variable performance-based pay - Excess 13th month pay and other benefits above P90,000
Non-taxable Compensation
- Exempt retirement benefits
- Exempt separation benefits
- De minimis benefits - within limits
- Mandatory contributions to SSS, PhilHealth, HDMF and union dues
- Exempt benefits of minimum wage earners
- Fringe benefits subject to fringe benefits tax
- Employee benefits exempt under treaty or international agreements 8. Employee benefits required by the nature of, or necessary to, the trade, business
- Employee benefits for the convenience or advantage of the employer
De minimis benefits
- Vacation leave- (private) 10 days max. per yr.
- Vacation & sick leave- (public) no limit
- Medical cash allowance to dependent of employees- 1.5K per sem; 250 per month
- Rice subsidy- 2K per month; 50 kg per month
- Uniform & clothing- 6K per yr
- Actual medical assistance- 10K per yr
- Laundry- 300 per month
- Employee achievement award- 10K per yr
- Christmas/Anniv gift- 5K per yr
- **Overtime/Night/Graveyard shift- 25% of basic min. wage
- Productivity incentive bonus- (CBA) - 10K per yr ; if 10,001 treated as a fringe benefit
Exempt benefits of Minimum Wage earners (MWE)
- Basic minimum wage Overtime pay
- Holiday pay Night shift differential pay
- Hazard pay
- Overtime pay
- Night shift differential pay
BHHON
Regular Compensation
- Basic pay
- Fixed allowances (COLA, fixed housing, RATA, etc.)
Supplemental Compensation
- Overtime pay Fees, including director’s fees (for employed directors)
- Commission Emoluments and honoraria
- Hazard pay Taxable retirement/separation pay
Non-compensation income
Not taxable:
- Remuneration for agricultural labor paid entirely in production of the farm
- Remuneration for domestic services
- Damages paid by the employer to employees
- Remunerations received as incidents of employment
Taxable as other income:
Tips from customers and indented mily
Remuneration for casual labor not in the course of the employer’s trade or business
Substituted Filing of Tax returns
Criteria for the substituted filing system:
- Employees receive purely compensation income (regardless of amount) during the taxable year
- Employee receives income from a single employer in the Philippines during the taxable year
- The amount of tax due from the employee at the end of the year equals the amount of tax withheld by the employer
- If married, the employee’s spouse also complies with all three aforementioned conditions, or otherwise receives no income;
- The employer files BIR Form 1604CF (Annual Information Return of Income Taxes Withheld on Compensation and Final Withholding Taxes); and
- Employee has BIR Form 2316 (Certificate of Compensation Payment/Tax Withheld) or Certificate of Final Tax Withheld At Source (BIR Form 2306) issued by his employer
De minimis benefits: Vacation leave
(Private) 10 days max. per yr.
De minimis benefits: Vacation & sick leave
(public) no limit
De minimis benefits: Medical Cash allowance to dependents of employees
1.5K per sem; 250 per month
De minimis benefits: Rice subsidy
2K per month; 50 kg per month
De minimis benefits: Uniform & clothing allowance
6K per yr
De minimis benefits: Actual medical assistance
10K per yr
