SUBMITTED BY: ATASHA NICOLE G.

BAHANDE

Business L I C A T

MATH
APP

IO
N
Differentiate
taxable and
non-taxable
benefits
 TAXABLE
BENEFITS
Taxable benefits provide some meals,
vacation trips, gift cards, event passes,
Non-taxable benefits that are not taxed or
and club memberships. In general, these
are taxed only [Link] IRS
kinds of benefits are charged at fair
distinguishes between various types of
market value, which is what the
non-taxable benefits: those that are
employee would pay for the benefit if
entirely tax-free,
they were to have it alone. This can vary
from what the entity pays for it.

NON-TAXABLE
BENEFITS
 TAXABLE
BENEFITS
Since taxable compensation is
considered, taxable incentives often have
those that are tax-free for income, and
the advantage that they can improve
those that are tax-free up to a certain
many employees' potential social
limit. Fully tax-free benefits include
security benefits. That's because Social
health insurance, retirement services (like
Security benefits are based on income,
a deferred compensation plan).
and with taxable benefits included, their
income is higher.

NON-TAXABLE
BENEFITS
 WHAT IS
“de minimis “
BENEFITS?
 de minimis
De minimis fringe benefits are low-value perks provided by an employer; de
minimis is legal Latin for "minimal". Perks that are determined to be de
minimis fringe benefits may not be accounted or taxed in some jurisdictions
as having too small value and too complicated an accounting.
According to BIR Revenue
Regulations No. 3-1998(C), the term
“de minimis benefits” refers to
facilities or privileges furnished or
offered by an employer to his
employees that are of relatively
small value and are offered or
furnished by the employer merely as
a means of promoting the health,
goodwill, contentment, or efficiency
of his employees.
WHAT
BENEFITS
ARE
CONSIDERED
AS “DE
MINIMIS”
BENEFITS?
 Benefits
For tax purposes, only the benefits considered as “de minimis” are
considered as tax-exempt. All other benefits given by the employers which
are not included in the listing of “de minimis benefits” are not considered
as “de minimis”, and hence, subject to income tax as well as withholding
tax on compensation income. All allowances regularly received by the
employees are subject to income tax, except those that are enumerated
below within the stated ceiling amount.
[Link] unused vacation leave credits of employees not exceeding
ten (10) days during the year; (RR No. 5-2011)
[Link] value of vacation and sick leave credits paid to government
officials and employees; (RR No. 5-2011)
3.) Medical cash allowance to dependents of employees, not exceeding
P750 per employee per semester or P125 per month; (RR No. 5-2011)
1. Rice subsidy of P1,500 or one (1) sack of 50 kg. rice per month
amounting to not more than P1,500; (RR No. 5-2011)
2. Uniform and Clothing allowance not exceeding P5,000 per annum;
(RR No. 8-2012)
3. Actual medical assistance, e.g. medical allowance to cover medical and
healthcare needs, annual medical/executive check-up, maternity
assistance, and routine consultations, not exceeding P10,000.00 per
annum; (RR No. 5-2011)
4. Laundry allowance not exceeding P300 per month; (RR No. 5-2011)
5. Employees achievement awards, e.g., for length of service or safety
achievement, which must be in the form of a tangible personal property
other than cash or gift certificate, with an annual monetary value not
exceeding P10,000 received by the employee under an established written
plan which does not discriminate in favor of highly paid employees; (RR
No. 5-2011)
6. Gifts given during Christmas and major anniversary celebrations not
exceeding P5,000 per employee per annum; (RR No. 5-2011)
7. Daily meal allowance for overtime work and night/graveyard shift not
exceeding twenty-five percent (25%) of the basic minimum wage on a per
region basis; (RR No. 5-2011)
8. Benefits received by an employee by virtue of a collective bargaining
agreement (CBA) and productivity incentive schemes provided that the
total monetary value received from both CBA and productivity incentive
schemes combined do not exceed P10,000.00 per employee per taxable
year. (RR No 1-2015)
Illustration
DE MINIMIS CONCEPT
 ILLUSTRATION
FROM DOLORFINO AND ASSOCIATES, CPA
An employer who give a monthly rice subsidy to its employees are allowed only
P1,500.00 monthly allowance per employee to be considered as “de minimis” as listed
above. If the employer granted more than this amount, the excess might be included
as taxable compensation income. The limitation stated in the above list are very
important. Any excess on the limit will be taxable and, therefore, be subjected to the
withholding tax. It is in the case when the employee is a rank-and-file employee, that
the benefits be subjected to the withholding tax and the normal income tax rate.
However, if the employee is a managerial or supervisory employee, it will be subjected
to the 32% fringe benefit tax. But before you consider it being taxable under normal
income tax rate or fringe benefit tax, you have to consider first the 13th month pay,
bonuses plus the “excess of the de minimis” benefits received by the employee and
compare it to the limit of P82,000 (RR No. 3-2015 dated March 9, 2015). If the excess
benefits, bonuses, and the 13th month pay exceeds P82,000 limit, that’s the time it is
taxable as stated above.
ILLUSTRATION
FROM DOLORFINO AND ASSOCIATES, CPA
 ILLUSTRATION
FROM DOLORFINO AND ASSOCIATES, CPA

For the employer, the “de minimis benefits”

granted to the employees are allowed as inclusion
in the deductions to gross income as deductible
salaries/expense in the computation of income
tax. On the other hand, for an employee, the
benefits are considered as additional salary but
are exempt from income tax, therefore, no tax will
be withheld on the amount of the benefits.
 Perdiguez, V. (n.d.). Non Taxable Employee
Benefits – “DE MINIMIS” Benefits. Dolorfino &
Associates, CPAs. Retrieved January 14, 2021,
from [Link]
0fringe%20benefit%20tax.

Sources
"FAQs for Government Entities Regarding De
Minimis Fringe Benefits". Internal Revenue
Service. Archived from the original on August
17, 2007.

"Publication 15-B: Employer's Tax Guide to

Fringe Benefits". Internal Revenue Service.
2016.