Disclaimer: The article that follow is my personal opinion, intended for discussion purposes only. It should not be construed as official opinion or regulation by any governmental agency that has authority over the matter.
Found this in my inbox:
Remy:
Can you help me understand what is the maximum amount of de minimis that could be extended to employees? What are other tax deductions can an employee have?
Thanks.
The National Internal Revenue Code of 1997 only mentions of De Minimis Benefits as one of the fringe benefits that are not taxable (Section 33.C). No definition whatsoever. As such, no explicit amount was provided for in the law.
Generally, benefits in kind are taxable. However, de minimis benefits, i.e. those of relatively small value and offered or furnished as a means of promoting the health, goodwill, contentment and efficiency of an employee, and those furnished for the convenience of the employer, are exempt.
For how much is that “relatively small value” is judgemental, and any quantifiable amounts are usually included in the P30,000 ceiling for the thirteenth month as exclusion from the gross income.
As regards your second question, I would like to assume you are referring to tax deductions on income derived from an employer-employee relationship. In that case, you can only claim the personal exemption allowed based on your status (single, head of family, married, plus dependents), which is the subject of the amendments contained in RA 9504. Nothing more, nothing less. Why, are you looking for more?
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i just want to ask if the “de minimis benefits” are inclusive of the 30,000.00 ceiling of the the 13th month? Like for instance if you’re basic pay is 15,000.00, you can have a de minimis of 15,000.00?
If that benefit is quantifiable and at as such amount (i.e., P15,000 for the whole year), why would you still cover the benefit as “de minimis”. Declare it as an ordinary employee benefit, it should not still be taxable for as long as the total with the 13th month does not exceed P30,000.
Calling it as “de minimis” invites a question from the BIR.
is the de minimis excluded in the computation of 13th month? Say my basic is P15,000 plus P2,500.00 de minimis per month,. How much will be my 13th month? is it P17,500 or P15,000l?
Thanks.
Hi Neci,
This will serve as an update to my earlier post.
According to the Implementing Rules and Regulations of RA 9504, under Section 1, it explicitly defines the meaning and application of de minimis benefits, excerpt as follows:
I hope you already get the idea.
Are the 13th month pay and other benefits separately considered in computing for the excess over 30,000? What if the 13th month pay alone is above 30,000 and the other benefits is less than 30,000? Which one will be taxed? thanks.
I don’t think it’s de minimis anymore. Please refer to the IRR or RA 9504 as to the meaning of de minimis benefit. Also it’s stated there that the de minimis benefit should not form part of the 30,000 exemption/ceiling.
The 13th month and other benefits are accumulated and compared to the ceiling of P30,000. Any amount in excess are subject to regualar income tax.
i agree, sir…de minimis are not part of the P30,000 ceiling, however, excess provisions of de minimis benefits will be considered in the P30,000.
13th month is based on basic pay, thus, de minimis is not included in the computation…
Are RATA & PERA taxable?
What is the status of the case in the Supreme Court questioning the BIR’s implementation of the Personal Exemptions provisions of RA 9504? I read somewhere that Senators Escudero and Roxas were supposed to file such a case.
Is the BIR correct in saying that the additional personal exemptions are applicable only from July 2008?
what do you mean by the “excess provisions of de minimis benefits will be considered in the P30,000?”.
what is the tax rate on the representation allowance of supervisors and managers? pls give brief explanation about allowances for supervisors/managers. what particular expenses are allowed to claim against their allowances? are they obliged to submit receipts for their expenses? what are the types of receipts they’re going to submit to the employer?thanks
Is meal allowance considered “de minimis benefit”? is there a ceiling for it to be considered “de minimis” (like a 1,500 a month rice alllowance)?
The law does not specifically state about any ceiling. It is basically subjective, to wit:
Mea allowance and rice allowance for such amounts are in my opinion should qualify as a deminimis benifets, provided that they are provided to rank-and-file employees.
what if i receive a 13th month pay of 12,500.00 and a fixed monthly allowance of P5,000.00. this allowance covers subsidy for rice,laundry,etc.to sum it up, we receive as fringe benefit the total amount of P72,500.00 per year.according to the law, P30,0000.00 of fringe benefits is tax exempt.can we still claim exemption for P18,000.00 (rice subsidy) and P3,600.00 (laundry) as de minimis benefits?
I lifted this from the BIR’s website http://www.bir.gov.ph/taxinfo/tax_withld.htm#49041 and tried to derive its maximum allowable per item per year.
The following shall be considered De Minimis benefits not subject to income tax, hence not subject to withholding tax on compensation income of both managerial and rank and file employees:
5,038.83 Monetized unused vacation leave credits of private employees not exceeding ten (10) days during the year
1,500.00 Medical cash allowance to dependents of employees not exceeding P750.00 per employee per semester or P125.00 per month.
18,000.00 Rice subsidy of P1,500 or one sack of 50 kg. rice per month amounting to not more than P1,500
4,000.00 Uniform and clothing allowance not exceeding P4,000 per annum
10,000.00 Actual yearly medical benefits not exceeding P10,000 per annum
3,600.00 Laundry allowance not exceeding P300.00 per month
10,000.00 Employees achievement awards not exceeding P10,000
5,000.00 Gifts given during Christmas and major anniversary celebration not exceeding P5,000.00 per annum
0.00 Flowers, fruits, books, or similar items given to employees under special circumstances
0.00 Daily meal allowance for overtime work not exceeding 25% of the basic minimum wage
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Does this mean a Php57,138.83 tax exempt Maximum Annual De Minimis benefits per employee?
I think not, 27,138.83 will be subject to tax.
De minimis is just a name for those benefits so as not to confuse it with other benefits like premiums and proceeds to & from sss, philhealth and pag-ibig.
It would’ve been great though if our DOF Secreatary can just set the ceiling for de minimis outside of the 30K.
@Tiffany — unfortunately, our lawmakers and policymakers seem to intentionally leave gray areas to our laws, policies, and guidelines, to leave room for… well… “corruption”!
question: regarding the de minimis benefits, our company provide us performance incentive, transportation and meal alowances, does the 30k ceiling apply to each item or to the accumulated total of all benefits?
question: sss, philhealth and pag-ibig contributions are being paid to the respective collecting agencies, why is it that in BIR Form No. 2316 (July 2008 ENCS) it is included in the nontaxable/exempt compensation income, whereas if we total the amount of all benefits included in that category this contributions will be added also and, thus, subject to the 30k ceiling?