Question

USE THE PHILIPPINE TAX SYSTEM. Compute for the taxable compensation income, fringe benefit, and total compensation tax due for the year 2020 if the taxpayer is

• Manager/supervisor
• rank and file
• Minimum wage earner earning P370/day for 313 days

Monthly Salary	50.000		Clothing Allowance	5.000
Overtime Pay (annual)	23.000		Meal allowance	6.000
Night Shift Differential	3.000		Rice monthly subsidy	1.800
SSS monthly premium	800		Annual Medical check-up	12,000
PHIC monthly premium	1.200		15th year anniversary award	11.000
HDMF monthly premium	100		Christmas gift	6,000
Holiday pay	4.000		Honorarium	10.000
Hazard pay	3,000		Representation allowance	12,000
monetized unused vacation leave	12 days @ P1,500/day		Check-up of child	Feb        500 May 1,500

Answer 1

Answer :

1. Taxable compensation income of Manager/supervisor is $720,200.
2. Taxable compensation income for Rank and file will also be the same, that is, $720,200.
3. Minimum wage earner is not liable for any taxable compensation income.

1. Total compensation tax due for year 2020 for manager/supervisor and for rank and file is $57,616.
2. Minimum wage earners are not liable for tax purposes.

1. Fringe benefits tax for manager/supervisor is $24,080.
2. Fringe benefits tax for Rank and file is also $24,080

3.Fringe benefit tax or withholding tax is not applicable to minimum wage earners.

Computation of Taxable compensation taxable income of Manager/supervisor:

A 1 2. 3 3 4 5 6 7 8 9 10 Computation of Taxable compensation taxable income of Manager/supervisor Particulars Amount Salary $ 600,000.00 Overtime pay $ 23,000.00 Night shift differential $ 3,000.00 SSC premium $ 9,600.00 PHIC premium $ 14,400.00 HDMF Premium $ 1,200.00 Holiday pay $ 4,000.00 Hazard pay $ 3,000.00 Clothing allowance $ 5,000.00 Rice monthly subsidy $ 18,000.00 15th year anniversary award $ 11,000.00 Christmas gift $ 6,000.00 Honrarium $ 10,000.00 Representation allowance $ 12,000.00 Compensation taxable income $ 720,200.00 11 12 13 14 15 16 17 18

B D 20 21 22 Amount $ 23 24 $ 25 $ 26 $ 27 Computation of Fringe Benefit Tax Particulars Clothing allowance Meal allowance Rice monthly subsidy 15th year anniversary award christmas gift holiday pay hazard pay Monetized unused vacation leave Representation allowance Check up of child Total Fringe benefit Fringe Benefit Tax $ $ 28 5,000.00 6,000.00 1,800.00 11,000.00 6,000.00 4,000.00 3,000.00 18,000.00 12,000.00 2,000.00 68,800.00 24,080.00 29 30 31 $ $ $ $ $ 32 33 34 $ 35 36 37 Total compensation tax due for year 2020 will be 8%multiply by compensation income 57616 38

Formulas used to calculate:

A B 1 2. 2 3 4 5 6 7 8 9 10 Computation of Taxable compensation taxable income of Manager/supervisor Particulars Amount Salary =50000*12 Overtime pay $ 23,000.00 Night shift differential $ 3,000.00 SSC premium =800*12 PHIC premium = 1200*12 HDMF Premium = 100*12 Holiday pay $ 4,000.00 Hazard pay $ 3,000.00 Clothing allowance $ 5,000.00 Rice monthly subsidy =1500*12 15th year anniversary award $ 11,000.00 Christmas gift $ 6,000.00 Honrarium 10,000.00 Representation allowance $ 12,000.00 Compensation taxable income =sum(B4:B17) 11 12 13 14 15 $ $ 16 17 18

А B c 20 21 22 23 $ $ 24 25 26 27 $ Computation of Fringe Benefit Tax Particulars Clothing allowance Meal allowance Rice monthly subsidy 15th year anniversary award christmas gift holiday pay hazard pay Monetized unused vacation leave Representation allowance Check up of child Total Fringe benefit Fringe Benefit Tax 28 Amount $ 5,000.00 6,000.00 $ 1,800.00 $ 11,000.00 $ 6,000.00 $ 4,000.00 $ 3,000.00 =12*1500 $ 12,000.00 $ 2,000.00 =sum(B23:B32) =B33*35% 29 30 31 32 33 34 35 36 37 Total compensation tax due for year 2020 will be 8%multiply by compensation income =B18*8% 38

Note :

1. SSC Premium has been assumed as the total contribution of employee as well as employer.
2. As per PhilHealth Contribution PHIC premium should be maximum 3% of basic salary, but as the given amount is less than the same so the given amount is considered for computing compensation income.
3. Monetized unused vacation leave is not taxable.
4. Clothing allowance is taxable unless it is exclusively exempted.
5. Meal allowance is not taxable
6. Rice monthly subsidy is allowed for a maximum $1,500 per month.
7. 15th year anniversary award received as cash gift is taxable and hence included and taxable income.
8. Christmas gifts received are taxable.
9. Check- up of child is not taxable.