Compensation Income

1.Salaries and usual compensation- normal tax rate using the graduated tax rate-
subject to CWT monthly

2. other benefits-
-13th month pay and other benefits- normal income tax
90,000- exempt
More than P90,000- excess is subject to tax
rank and file- normal income tax
managerial or supervisorial- fringe benefit tax

DE MINIMIS BENEFITS
-benefits of small value intended to promote good will and health in favor of the
employer of the tax payer

rr 8-2018

Medical cash allowance TH-1500/SEM

rice subsidy TH 2000/MONTH

uniform and clothing allowance TH 6000/ANNUM

other de minimis benefit

a. monetized unused vacation credits of private employees not exceeding 10 days
b. medical cash allownce
c. rice subsidy
d. uniform and clothing allowance
e. actual medical assistance not exceeding 10k
f. laundry allowance 300/mo
g employees achievement awards in the form of tangible personal prop other than
cash or gc 10k received under an establish written plan
h. gifts given during christmas and major celebrations not exc 5k
i. daily meal allowance for ot or graveyard shift not exc 25% of basic minimum wage
j. benefits received by an employee by virtue of a CBA and productivity incentive
scheme 10k

*any excess over the amounts shall form part of other benefits subject to the 90k
threshhold

*commission shall be part of compensation income

*SSS, GSIS, PAG-IBIG AND pHILHEALTH mandatory CONTRIBUTIONS - exluded from the
gross income

minimum wage earner excluded from income tax

13th month pay or other benefits use 90k threshold

Senior Citizens- if classified as minimum wage earner

Income subject to Normal Tax - if taxable income is 250k

Retirement Benefit
RA 4917 - pursuant to a reasonable private benefit plan approved by the BIR -
50yrs-10yrs in service- availed benefit ONCE

ra 7641- no rpbp
WITH CBA - age stated in the CBA - 10yrs in svc
W/O CBA - 60-65 - 5yrs in svc

*provisions of any existing law to the contrary notwithstandig, ss benefits,

retirement ratuities, pensions, and other similar benefits received by resident or
nonresident citizens of the Ph or aliens who come to reside permanently in the Ph
from govt agecies and other institutions, whether public or private

SEPERATION PAY
- received by his employee or his heirs, because of death, sickness or other
physical disability, or for any cause beyond the control employee is exempt from
income tax and consequently from withholding tax.

Income from Business, Trade or Profession

Individual taxpayer can choose

8% tax on gross sales/receipts

Graduated income tax

requisites
1. gross sales/ receipts does not exceed 3m
2. available only to the icome earned by the taxpayer sourced from business, trade
or profession

mixed income earners-

compensation- graduated income tax
from business/profession - no deduction of 250,000 from gross sales/receipts
-if gross receipts does not exceed 3m - option

The option to choose 8% tax is not avail to

1. vat registered taxpayer
2. taxpayer who is subject to other percentage tax, such as common carriers and
opertaros of water and gas utilities
3. partners of GPP by wirtue of their distributive share

*amount of gross sales/receipts pertain to the amt earned from business, trade, or
profession only- compensation income is not added to the amount of gross
sales/receipts in order to determine the 3m threshhold