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    De Minimis Benefits (PINGAD)

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    Vee Ya
    De Minimis benefits refer to small value privileges provided by employers like entertainment, medical services or discounts. They help promote employee health, goodwill and efficiency. Under Philippine law, certain benefits are considered de minimis and exempt from income tax if they do not exceed regulatory limits. These include monetized unused leave, rice subsidy, uniforms and laundry allowance. Benefits exceeding limits are considered taxable income. Terminal leave pay is also now subject to the 10-day limit and taxed.

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    De Minimis Benefits (PINGAD)

    Uploaded by

    Vee Ya
    48 views4 pages
    De Minimis benefits refer to small value privileges provided by employers like entertainment, medical services or discounts. They help promote employee health, goodwill and efficiency. Under Philippine law, certain benefits are considered de minimis and exempt from income tax if they do not exceed regulatory limits. These include monetized unused leave, rice subsidy, uniforms and laundry allowance. Benefits exceeding limits are considered taxable income. Terminal leave pay is also now subject to the 10-day limit and taxed.

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    De Minimis Benefits(PINGAD)

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    De Minimis benefits refer to small value privileges provided by employers like entertainment, medical services or discounts. They help promote employee health, goodwill and efficiency. Under Philippine law, certain benefits are considered de minimis and exempt from income tax if they do not exceed regulatory limits. These include monetized unused leave, rice subsidy, uniforms and laundry allowance. Benefits exceeding limits are considered taxable income. Terminal leave pay is also now subject to the 10-day limit and taxed.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    48 views4 pages

    De Minimis Benefits (PINGAD)

    Uploaded by

    Vee Ya
    De Minimis benefits refer to small value privileges provided by employers like entertainment, medical services or discounts. They help promote employee health, goodwill and efficiency. Under Philippine law, certain benefits are considered de minimis and exempt from income tax if they do not exceed regulatory limits. These include monetized unused leave, rice subsidy, uniforms and laundry allowance. Benefits exceeding limits are considered taxable income. Terminal leave pay is also now subject to the 10-day limit and taxed.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 4

    De Minimis Benefits

     It refers to privileges such as entertainment, medical services, or courtesy discounts on


    purchases which have a relatively small value and are granted by the employer, on top of
    their basic salaries.
     It also helps in promoting health, goodwill, contentment, or efficiency of the employees.
     Under the TRAIN (Tax Reform for Acceleration and Inclusion) Law or RA 10963, D de
    minimis benefits are petty fringe benefits that are exempted from tax.

    Originally, other petty fringe benefits which fall within the scope and characteristics of de
    minimis even if it is not listed, are treated normally as de minimis, and are exempted from
    income tax.

    However, the BIR and Department of Finance changed the rule under RR5-2011, as last
    amended by RR11-2018 wherein the term “de minimis benefits” was restricted to mean only
    the following:

    1. Monetized unused vacation leave credits of private employees.


    Condition: Not exceeding 10 days
    2. Monetized unused sick and vacation leave credits of government officials and employees.
    3. Medical cash allowance to dependents
    Limitation: Not exceeding P1,500 per employee per semester (or P250 a month)
    4. Rice Subsidy
    Limitation: Not exceeding P2,000 or 1 sack of 50kg rice per month worth P2,000 or less
    5. Uniform and clothing allowance
    Limitation: Not exceeding P6,000 per annum
    6. Actual Medical Assistance
    Limitation: Not exceeding P10,000 per annum
    7. Laundry allowance
    Limitation: Not exceeding P300 per month
    8. Employee achievement award
    Limitation: Must be in form of tangible property not exceeding P10,000 per annum
    9. Gifts given during Christmas or major anniversary celebration.
    Limitation: Not exceeding P5,000 per annum
    10. Daily meal allowance for overtime work and night or graveyard shift
    Limitation: Not exceeding 25% of the basic minimum wage on a per region basis.
    11. Benefits received by an employee by virtue of collective bargaining agreement (CBA)
    and productivity incentives scheme.
    Limitation: Not exceeding P10,000 combined per annum.
    Exception: In case of exceeding the limit, the whole amount is considered taxable.

    Taxable de minimis benefits


    1. Excess de minimis over their regulatory limits.
    2. Other benefits of relatively small value that are not included in the list of de minimis
    benefits.
    Example: Transportation allowance, rent allowance, Travel allowance, Meal allowance
    (regular employee)

    Treatment of taxable de minimis benefits

    a. For rank and file employees- treated as other compensation income under “13th month
    pay and other benefits”
    b. For managerial supervisory employees- treated as fringe benefit subject to final fringe
    benefit tax

    Solution:

    BENEFITS Actual Limit Excess


    Monetized unused VL (1) 5,400 6,000 0
    Monetized unused SL (2) 5,400 0 5,400
    Medical Assistance (3) 7,000 10,000 0
    Rice Subsidy (3) 30,000 24,000 6,000
    Clothing allowance (3) 9,000 6,000 3,000
    Laundry Allowance (3) 6,000 3,600 2,400
    Taxable de minimis as “other benefits” P16,800
    Explanation:

    1. Unused days x daily rate: 9 days x P600= P5,400


    2. Monetized unused sick leave for private employees is taxable.
    3. Rice subsidy, laundry and clothing allowance all exceeded the regulatory limit.

    Solution:

    BENEFITS Actual Limit Excess


    Monetized unused VL credits (1) 6,000 Exempt 0
    Monetized unused SL credits (1) 9,000 Exempt 0
    Uniform allowance 5,000 6,000 0
    Laundry allowance (2) 4,800 3,600 1,200
    Taxable de minimis as “other benefits” P1,200
    Explanation:

    1. Monetized unused vacation and sick leave for government employees are exempted from
    income tax.
    2. Laundry allowance exceeded the limit.

    Solution:
    BENEFITS Actual Limit Excess
    Loyalty or service award (1) 25,000 0 25,000
    Christmas and anniversary gift (2) 20,000 5,000 15,000
    Meals (3) 15,000 0 15,000
    Taxable de minimis as “other benefits” P55,000

    Explanation:

    1. The limit on the loyalty or service award is applicable only to tangible things.
    2. Christmas and anniversary gifts exceeded the limit.
    3. Meal allowance given to overtime or graveyard shift workers are the only meals
    exempted from tax and considered as de minimis.

    Commutation of accumulated leave credits

     Terminal leave pay due to involuntary separation from employment of the employee is
    now treated as de minimis benefits subject to the 10-day leave credit limit.
     It is no longer exempt as part of exempt termination benefits.

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