TAXATION

QUIZZER ON WITHHOLDING OF ANNUAL TAX COMPENSATION INCOME

QUIZZER SOLUTION:

Ruiz Moore is an office employee earning Jan-Nov December Annual

62,500 basic pay per month. During the period Basic Pay 687,500 62,500 750,000
of January to November 2020, Ruiz earned the Late and absences 8,935 (8,935)
following: Overtime pay 2,140 1,640 3,780
Taxable allowances 38,500 3,500 42,000
• Basic pay, 687,500 where late and Rice subsidy 19,800 1,800 21,600
absences of 8,935 is not yet deducted. Christmas cash gift 10,000 10,000
• Overtime pay, 2,140 and taxable 13th month pay 62,500 62,500
allowances of 3,500 per month. Gross compensation income 880,945 (1)
• Rice subsidy of 1,800 per month. Less: Rice subsidy (21,600)
• SSS, PHIC, HDMF contributions totalled Christmas cash gift (5,000)
20,212.50 for all 11 months. 13th month pay (62,500)
Other benefits (5,000)
Withholding tax for all 11 months totalled Statutory deductions 20,212.50 1,837.50 (22,050)
110,581.47. Taxable compensation income 764,795 (1)

During December, the following were earned Annual tax due:

alongside the 62,500 basic pay for the month:
Minimum tax due 30,000.00
• Overtime of 1,640, taxable allowance of Tax on excess
3,500 and rice subsidy of 1,800. (764,795 – 400,000) x 25% 91,198.75
• Christmas cash gift, 10,000. Income tax due for the year 121,198.75 (2)
• 13th month pay, 62,500 Less: Tax withheld from Jan-Nov (110,581.47)
Tax payable for December 10,617.28 (3)
Compute the following:
1. Ruiz’s annual gross and taxable
compensation income
2. Income tax due for the year
3. Tax payable for December
ANNUAL CALCULATION OF TAXES
ANNUAL TAX vs WITHHOLDING TAX