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b. Honoraria
Advances and reimbursements necessary in The excess of actual expenses over advances
the performance of duties are not subject to are taxable income if not returned.
withholding tax if they are ordinary and
necessary expenses and are properly
accounted for or liquidated.
Transportation and cell phone allowances of Transportation: Php 1,500 for R&F
call center employees are not taxable. employees, Php 3,000 for supervisory
employees
Cell phone: Php 1,200 for supervisory They should be on call 24/7. Bawal
employees maubusan ng load ang mga boss.
d. Commission
e. Fees
Marriage fees, baptismal offerings, sums paid
for conducting masses for the dead, and the
like are subject to tax.
h. Retirement pay
Generally, it is taxable.
Exception:
- GSIS and SSS retirement pays Hinulugan ko nang matagal. Pinaghirapan ko
`to, tapos babawasan nyo pa?
- Retirement pay due to old age, employed for The law does not require that the 10-year Ive worked too hard for many years under
10 years, at 50 years of age, availed of for the service should be uninterrupted. your company, then you have the nerve to
first time (i.e., not availed of for the same or tax my retirement pay? This should be a
another employer) giveaway!
i. Separation pay
Voluntary separation taxable Iniwan mo ako Magtiis ka ngayon.
Involuntary separation not taxable
j. Pension
l. 13th month pay and other benefits 13th month pay, bonuses, and other
If within Php 30,000 not taxable benefits, where other benefits include the
Excess over Php 30,000 taxable excess of actual de minimis benefits over
the prescribed ceilings
n. Overtime pay
Overtime pay is taxable.
o. Profit sharing
q. Beneficial payments
t. Cancellation of debt
- No consideration: gift, not income
- Corporation/stockholder: dividend income Amount of debt cancelled
- Performance of services: amount of debt
cancelled
It is like an additional benefit to the salary of
u. Insurance premiums as compensation the employee. Thus, it is an income.
If beneficiary is employee, and paid by
employer, it is part of employees income.
Amount of tax paid
v. Income tax paid as compensation
Paid by the employer on behalf of the
employee, the basis is the amount of tax paid.
Indirect dividend
Only the excess amount is taxable since
Liquidating dividend the excess amount of liquidating dividends per se are return of
liquidating dividends over the cost of shares investment. Thus, if there is excess, it is
surrendered is taxable considered income.
8. Annuities Annuity representing interest taxable Return of premiums are just like return of
Annuity as a return of premium not taxable capital. You have no income, so there is
nothing to tax. That is why interest is taxed,
because it is income.
9. Prizes and winnings Prizes
a. Php 0 to Php 10,000 normal tax
b. Php 10,001 and above 20% final tax 10,001 to infinity
Winnings
Regardless of the amount, they are subject to
20% final tax.
10. Pensions
11. Partners share in a partnership
12. Bad debt recovery Only taxable to the extent of the tax benefit in Actually ascertained to be worthless and Tax benefit rule/doctrine of equitable
the year it was written off uncollectible, and actually written off benefit
13. Tax refund or credit If the tax paid is deducted, it is taxed. Refunds from these taxes are not taxable: Tax benefit rule/doctrine of equitable
If the tax paid is not deducted, it is not taxed. - Donors tax benefit
- Income tax
- VAT, claimed as input tax
- Estate tax
- Stock transaction tax
Mnemonic: DIVES
14. Damages recovery Damages for loss of profit or income taxable
15. Income from whatever source Even income derived from illegal sources are The bad guy is obligated to return the
taxable, hence, from whatever source. income, still.
DE MINIMIS BENEFITS
This list of de minimis benefits is exhaustive. Meaning to say, benefits granted to employees which are not in this list cannot qualify as de minimis benefits.
FRINGE BENEFITS
The tax base of fringe benefits is based on the grossed-up monetary value (GMV) of fringe benefits furnished, granted, or paid by the employer to the employees, except rank and file
employees. In other words, only those fringe benefits received by supervisory/managerial employees are subject to fringe benefit tax. The fringe benefit tax is 32% of the GMV.
1. Granted in money or directly paid for by the employer amount granted or paid for
2. Property other than money, ownership is transferred FMV of the property
3. Property other than money, ownership is not transferred depreciated value of the property
Note: Under the assignment of residential property, if the cost (or book value) is lesser than its fair market value, the excess amount should be amortized throughout the
remaining estimated useful life of the residential property.
2. Motor vehicle
3. Yacht
The value is based on the depreciation of the yacht at an estimated useful life of 20 years. So, yacht divided by 20 years times 32% equals FBT. Sosyal kasi ang yate.
4. Personal expenses not related to business and paid for by the employer
5. Household personnel expenses paid for by the employer
6. Interest on loan at less than market rate
Conditions: The interest is below 12%, the interest rate in regulation nowadays.
The value is the interest foregone (if free of interest) or the difference of interests (if below 12%).