Other Benefits:

- Christmas bonus - Productivity incentive

- Mid-year bonus - Performance bonus
- Loyalty awards - Gifts in cash or kind

Exempt:
- Required by nature or necessary to the trade or profession of employer
- De minimis
- For convenience of employer
- Not “personal expense” of employee or “subject to liquidation”
- RATA to government employee (except excess if not returned to employer)
- COLA of minimum wage earner

Basic:
- Fixed or variable allowance (representation, transportation, communication, living away
from home)
- Daily meal allowance
- Tips and gratuities (not accounted by employee)
- Vacation and sick leave allowance (except de minimis)
- Stipends of physicians
- Gain from exercise of stock option

Without Fringe:
- Housing inside or adjacent within 50 METERS from business premise
- Temporary housing for 3 MONTHS OR LESS
- Housing of ARMED FORCES OF THE PHILIPPINES
- Business class ticket
- Food and transportation (except lodging) for business meeting
- Use of aircraft or helicopter
- Contributions of employer for benefit of employee (retirement, insurance, hospitalization)

With Fringe
- Expense paid or reimbursed by employer
- 30% cost of first class ticket
- Travel expense of employee’s family members
- Educational assistance (except if connected with employer’s trade and under scholarship
program of company)
Tax refunds not taxable
- Income tax (except fringe benefit tax)
- Estate tax
- Donor’s tax
- Special assessment
- Stock transaction tax
- Income tax paid to foreign country if taxpayer claimed credit in the year the tax is paid

Rental income taxable

- Expense assumed by lessee such as real property tax
- Prepaid rent
- Leasehold improvement made in agreement with lessor and not for removal of lessee

Rental income not taxable

- Advance rentals or option money
- Security deposit

Leasehold improvement:

1. Outright or Lump-sum = FMV upon completion of improvement

2. Spread out or Annual = Cost x (Remaining / Useful life)
Remaining lease term
Liquidating Dividend – Basic tax

Stock Dividend – Basic tax if proportionate interest is changed

Exclusions:
- Life insurance
- Return of premium
- Gifts, bequests, devises
- Compensation for injury or sickness (lost capital, loss of goods/belongings, loss of earning
capacity)
- Retirement benefits of private employees under a plan or RA 7641:
a. In service at least 10 years
b. 50 years old or more
c. 1st time to avail retirement
- Pension and gratuities
- Involuntary separation pay (closure or retrenchment)
- Mandatory SSS / PhilHealth / Pag-ibig / Union dues / US Veteran
- Miscellaneous items
a. Income of foreign government
b. Income of national government and subdivisions
c. Prize
d. 90,000 - 13th month and other benefits
e. Gains from sale of bonds with maturity of more than 5 years
f. Gains from redemption of share in mutual fund

Inclusions:
- Compensation / business income
- Gains from ordinary property
- Rental
- Royalty
- Interest
- Dividend
- Annuity
- Prizes
- Pension
- Share in general professional partnership