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Chapter 10- Compensation Income ' 10 - Compensation Income

Cha te
lO. Income exempt under treaty ER 10: SELF-TEST EXERCISES
CHA PT
l 1. 13th month pay and other benefits not exceeding a total of P90,000
12. GSIS, SSS, Phil Health, and other contributions ssion Questions
13 Compensation income including overtime pay, holiday pay, night 3, ""rate and explain the elements of an employer-employee relationship.
. differential pay, and hazard pay o f Minimum
· · W age Earners Shi "wat are the types of employees as to function? Enumerate and explain.
14. Compensation income of employees in thepublic sector if the same does,,
exceed those of minimum wage earners in e non-agricultura sector
wa
'5. wo
arc the types of employees as to taxability? Distinguish each.
are minimum wage earners? Enumerate their exempt benefits.
Demonstrate the tax model on compensation income,
These listed benefits are not considered compensation income; hence, they art 6 What are the classifications of compensation income? Discuss each.
exempt from the withholding tax on compensation. · Enumerate the general classes of non-taxable benefits.
s, enumerate the list of demini.is benefits and heir respective thresholds.
DEADLINE OF FILING AND REMITTANCE OF THE WITHHOLDING TAX ON 9, Explain the "necessity o t e employer" rule and the "convenience of the employer"
COMPENSATION rule.
Employers shall file the BIR Form 1601-C (Monthly Remittance Return of Incon 10. Distinguish regular compensation from supplemental compensation. Enumerate
Taxes Withheld on Compensation) on or before the 10 day of the following month the benefits considered as supplemental compensation.
11. How are stock options taxed under current tax rules?
the withholding was made except for taxes withheld for December which shall be
filed/paid on or before January 15 of the succeeding year. 12. Enumerate and explain the components of "13 month pay and other benefits."
13. Discuss the difference in tax treatment of the "other fringe benefits" of rank and
file employees and managerial or supervisory employees.
Employers are also required to file BIR Form 1604-CF (Annual Information Retur
14. Discuss the tax treatment of "13th month pay and other benefit"
of Income Taxes Withheld on Compensation and Final Withholding Taxes) on or
before January 31 of the following calendar year in which the compensatlon True or False 1
income payments and passive income payments were made. F1. Benefits for the advantage of the employee are exempt from income tax.
F 2. A rank and file employee recommends managerial actions.
Employers shall furnish each employee-taxpayer a copy of BIR Form 2316 T 3. A consultant is not an employee.
(Certificate of Compensation Payment or Income Tax Withheld) on or before T A manager has the power to lay down and executes policies.
January 31 of the succeeding year. T S.4.
F A regular employee is subject to the regular income tax.
!
F 6. Filipinos employed by international missions are generally exempt.
Penalties for Non-compliance T 7. Filipinos working in Philippine embassies are exempt from taxation.
Employers are subject to the same penalties discussed in Chapter 4 for not T 8. A minimum wage earner is exempt from income tax.
compliance of withholding tax requirements. 9, Compensation income includes regular compensation, supplemental
F compensation and 13th month pay and other benefits in excess of P90,000.
Treatment of the Withholding Tax on Compensation I0. Compensation income includes all remunerations received under an employer-
If the employee has other items of income that are subject to regular income iax employee relationship, including all fringe benefits of managerial or supervisory
such as income from business or profession, income from other employmen! T employees.
•ct f ploymcnt are exempt.
casual income, he must file a consolidated income tax return to include such ite"".5 T
11. R •
· emunerations received as incidents ot em] and HDMF are excluded from
12 The employee's share in SSS, GSIS, PhilHeal th,
OI f%income for the entire taxable year. The withholding tax on compens@ tion
F
credited against the total tax due in the consolidated income tax return.
Substituted filing of tax return
F ~!· compensation income. . .
The exempt vacation leave credit is 10 E overnment employees.
F ,! exempt de mimimis benefits include al ",, (or any employee.
relatively small value.

F
Under the substituted filing system, the employer files the income tax return of:: T ,' {e excess de minimis are considered "oth'',{ aays is exempt de minimis.
th
employee. If e amount of tax is correctly withheld by the employer, 17· The sick leave credit of private employees up to mpt from tax.
· The overtime pay of minimum wage earners IS exe
employee no longer needs to file an annual income tax return.

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 Chapter 10 • Compensation Income er 10 - Compensation Income
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True or False2 . rise Drill No. 1
F 1. Filipinos employed in Philippine embassies are generally exempt [" yank provided for, indicate whether the specified an,en
F 2. Supplemental compensations are fixed amounts regularly received by ,, [nU P&Cl 2nefit or remuneration is an
em of: >
employee every payroll period. ~
T 3. A regular employee can be a managerial. supervisory, or rank and file employ, gC- regular compensation - FB-fringe benefits
F 4. Regular compensation includes variable performance-based rernunera~ 'sc-supplemental compensation - OB- 13month pay & other benefits
received by the employee with or without regard to the payroll period. ' DM- de minimis benefits · EB - exempt or non-taxable benefits
F
T
5.
6.
All directors are not considered employees.
Rank and file employees do routinary or clerical jobs.
- Benefit or remuneration
Rank & file Manager or
employee Supervisor
F 7. A minimum wage earner with business income Is considered a regular employ, Uniform allowance DM
1.
SC DM
T
subject to income tax. 'a Commissions
SC
8. A managerial employee is least likely to be a minimum wage earner. 3. Rice allowance DM DM
F 9. The statutory minimum wage is P60,000 annually or the amount fixed by lit 4. Productivity incentive DM DM
F Regional Tripartite Wage and Productivity Board whichever is lower. s. Christmas bonus - government OB OB
10. The position and function test, compensation threshold test, and exclusivity lest 6. Fixed monthly RATA - government EB EB
T
are required for alien employees. 7. Medical benefits DM DM
11. A managerial employee can be a special employee.
F 12. The Christmas gift of private employees forms part of "other benefits" while th
8. Additional compensation allowance - OB OB
government
of government employees is considered de minimis benefit
T 9, 13th month pay OB OB
T
13. The fringe benefits of managerial or supervisory employees are generally subjet
to fringe benefit tax.
10. Christmas gift - private DM DM
11. Anniversary gift DM DM
14. Resident Filipinos employed by foreign embassies, missions, or international 12. Shuttle allowance to a distant facility EB EB
organizations are generally taxable.
T 13. Excess de mini mis benefits OB FB
15. Non-resident Filipinos employed by foreign embassies, missions, or international 14. Basic salary RC RC
F organizations are generally exempt
1S. Profit sharing SC SC
16. Half of the benefits given for the convenience or necessity of the employer an 16.
F taxable. Other employee personal expenses OB FB
paid by employer
F
17. Fixed allowances are supplemental compensation income. 17. Emoluments and honoraria SC SC
18. For managerial employees, the excess of de mini mis benefits over their limits at
included as "other benefits". 18. Stock bonus SC SC
T 19, Educational assistance to employee
EB EB
19. The excess of the 13th month pay and other benefits over P90,000 is consider!
compensation income. ~ under employment bond
F 20.,
Used sick leave credit RC RC
20. The substituted filing system applies to employees who have multiple #
2 Monetized unused sick leave - private OB FB
T successive employments
DM
21. Ar employer controls the means and methods by which the work Is to bl
22 Monetized unused vacation leave - DM
accomplished. ~ Private
F EB
22. Ar employee who became a minimum wage earner during the year is ex~
23,
Monetized unused sick leave - EB
from tax for the entire year. hi-1 ,...__ government
T 24, EB
23. Minimum wage earners who are disqualified for exemption during the year Monetized unused vacation leave - EB
T be taxable as regular employees. , r--. _government
24. Minimum wage
. .
whc
earners w o breached the minimum wage threshol
j4by asal@0 25,
Excess over P90,000 of 13th month SC SC
T ,,"®during the year are taxable only staring trom the months ofic®,, S zP@y and other benefits
th ge benefit is usually in the nature of an incentive. Compensation incolll
e nature of performance-based pay.

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 Chapter 10- Compensation Income r 10 - Compensation Income
Cha te
Required:
Exercise Drill No. 2 (ompute the taxable "13th month pay and other benefits" ,
Assuming that the employee is a private employee with a basic salary of PJoo
j. Ran k
and file employee 35000 assuming the employee Is a:
in a region with a minimum wage of P250 per day, indicate the annu>) ,'®; Managerial or supervisory employee
compute the annual excess de minimis benefits in the spaces provided for. mlt ~ 0
De mlnlmis benefits Limit yerclse Drill No. 5
Excess
An employee with 10 dependent children received the following benefits during the
1. PlOO/meal for 158 overtime days
62.50/DAY 5925
»ii

during the year year:

2. P6,000 monetized value of 15-day 4000 2000
- Regular compensation
P 1,068,000
vacation leave credits Supplementary compensation
340,000
3. P1,000 monthly medical allowance to 250/MO 9000 13th month pay
89,000
dependents of employees Other fringe benefits
13,000
4. P6,000 monetized value of 15-day 0 6000 Required: Compute the taxable amount in each of the following taxation schemes:
sick leave credits
s. P12,000 medical benefits 10000/YEAR 2000 Progressive Fringe
6. P2,000 quarterly uniform allowance 6000/YEAR 2000 Em e tax benefit tax
7. PSOO monthly laundry allowance 300/MO 2400 1. Rank and file employee 1420000 0
8. P10,000 achievement award in cash 0 10000 2. Mana;:erial or su 1408000 13000
9. P3,000 Anniversary gift and P5,000 5000/YEAR 1068000+340000+(89000+13000-90000)
Christmas gift 3000
2000/MO Exercise Drill No. 6 1068000+340000
10. P3,000 monthly rice allowance 12000 The following relates to the compensation income of a minimum wage earner
Exercise Drill No. 3 employee:
A SO-year-old employee retired during the year after 30 years of continuous servia Compensation and overtime pay (January to April) p 48,000
and received the following remunerations: Compensation and overtime pay (May to December) 97,000
Basic salary p 350,000 350000 13th month pay and other benefits in December 15,000
Employee share to SSS, PHIC, HDMF and union dues 24,000 (24000) Required:
Overtime pay
16,000
Retirement pay 16000 Compute the gross taxable compensation income assuming the employee became a:
2,300,000 1. 48000
400,000 =342000
Benefits from SSS startin Ma 1
Pro-rated 13th month pay
21,000
romotion startin; Ma 1 97000
Required: Compute the gross taxable compensation income.
Multiple Chotce - Theory: Part 1
Exercise Drill No. 4 1. Which is usually an employee?
An employee received the following benefits: A •
a. A director who is at the same time the Chief Executive Officer
13th month pay
Profit sharing p 60,000 60000 b. A director regularly receiving a retainer's fee
De minimis benefits: 12,000 30000 c. Consultant
d. A hired TV program talent
De mini mis benefits within their limits 10000
Excess de minimis benefits 80,000 25000 2
Other de minimis benefits 30,000
=125000 D· Which is not an element of an employer-employee relationship?
a. Selection process c. Power of control
Other fringe benefits 10,000
Total incentives 25.000
(90000) b. Power to dismiss d. Payment of fixed wages
p 182.000 =35000
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Chapter 10 - Compensation Income r 10 - Compensation Income
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C Which is not an employee classification as to function? tuple Choice - Theory: Part 2
, Managerial employee c. Special employee
,tul Ari of these are exempt benefits of a minimum wage earner except
b. Rank and file employee d. Supervisory employee C 1- hazard pay. c.vacation pay.
,, holiday pay. d. overtime pay.
C 4. Which is not an employee classification as to taxability?
a. Regular employee c. Managerial employee
b. Special employee d. Minimum wage earner A 2 Which is not a supplement.al compensation income?
· a. De mini mis benefits c. Allowances
C 5. The statutory minimum wage is b. Honoraria d. Bonuses
a. The amount fixed by the Regional Tripartite Wage and Productivlty Board D 3, Fringe benefits includes
b. The rate fixed by the Regional Tripartite Wage and Productivity Board Whij a. Basic salaries c. Retirement and separation pay
must not exceed PS,000 a month or P60,000 annually b. Fees d. De minimis benefits
c. The higher between P5,000 a month or P60,000 annually or the rate fxeM
the Regional Tripartite Wage and Productivity Board A 4, De minimis benefits are generally
d. P5,000 a month or P60,000 annually unless it exceeds the rate fixed by a. exempt from tax. c. t.axable in excess of P90,000.
Regional Tripartite Wage and Productivity Board b. fully taxable. d. subject to fringe benefit tax.
C B s. Which do not form part of other benefits of rank and file employees?
6. Which is not included in the gross taxable compensation income of an employee) !
a. Fixed monthly allowances ] a. Excess of de mini mis over their legal limits
b. Performance based bonuses i b. Salaries and wages
c. 13th month pay and other benefits not in excess of P90,000 j c. Productivity incentive
d. 13th month pay and other benefits in excess of P90,000 d. Employee educational assistance

A A 6. The term "de minimis benefits" does not include

7. Which is not an exclusion criterion on employee benefits?
a. Necessity of the employee rule a. Christmas bonus c. Rice subsidy .
b. Convenience of employer rule b. Christmas gift d. Monetized unused vacation leave
c. Exemption by special law D 7. Select the most accurate statement
d. Exemption by treaties or international agreements a. De mini mis benefits are totally exempt from income tax.
B 8. For purposes of the fringe benefit tax, fringe benefits pertain to I b eminimis
D firs in excess of P90 ' 000 are subject to income tax.• ·
. . . b ienelis
c. The excess of "other benefits" over P90,000 constitutes compensation income.
a. other fringe benefits not included as compensation income of any employs d. The benefits of rank and file employees are not subject to fringe benefit tax.
b. other fringe benefits not specifically included as compensation income d
managerial or supervisory employees. C
8. Which is taxable as compensation? b fits fr m resignation
c. all fringe benefits of managerial or supervisory employees. SSS b fit c. Termination vene o .
d. all fringe benefits of rank and file employees. a. ene its · . 'ties from foreign institutions
D b. Retirement benefits d. Retirement gratu
9. Which is a correct statement? 1D 9. Which of the following is subject to income tax?
a. The compensation income of managerial or supervisory employees is su a. Minimum wage
to fringe benefit tax.
b. De minimis benefits
b. The taxable fringe benefits of rank and file employee are subject to (ri8' c. GSIS benefits d HDMF
benefit tax.
d. Voluntary contribution to SSS, PHIC an .
c. The taxable fringe benefits of managerial and supervisory employee "
subject to regular income tax.
C 10. Which is correct when a minimum wage earner
derives other income outside his

d. The compensation income of rank and file employees is subject to regulal" employment? +dir 3me tax
a. He is subject to withholding tax an.""_,,come tax.
b. He is neither subject to w,thholdmg ®",%a to income tax.
c. He is exempt from withholding tax, but sutye
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 Chapter 10 - Compensation Income
t r 10. Compensation Income
d. He Is subject to withholding tax, but exempt from income tax. cChapte

D 11. Rice allowance is taxable when

D y, The P90,000 exemption threshold is applicable to
· a. regular employees. c. managerial or supervisory employees.
a. paid in cash. cC.given more than P1,000 a month. b. rank and file employees. d. all employees.
b. paid in non-cash. d. given more than P2,000
D 12. Meal allowance is taxable when given A 2{ The excess of "13th month pay and other benefits" is
• a. subject to regular tax. c.subject to fringe benefit tax.
a. for overtime duty. c.for night shift assignment b. subject to final tax. d. exempt from income tax.
b. in cash. d. as incentive to all employees.
C OR
13. Which is an exempt de minimls benefit? D 72. Which is subject to the withholding tax on compensation?
a. Salary of domestic "kasambahays"
D a. 9-day monetized sick leave b. Compensation for injuries and sickness
b. 15-day monetized vacation leave
c. Salaries of resident Filipinos working in embassies, International missions
c. Rice subsidy of half sack a month valued at P1,000 and organizations
d. Uniform allowance of P6,500
d. Salary of minimum wage earners receiving fixed allowances
B 14. Which is a correct de mfnimis limit?
a. Actual medical cash allowance of P5,000 per year B 23. Statement 1: A minimum wage earner who loses the benefit of exemption by
b. Laundry allowance of P3,600 per year transferring to a region with a lower minimum wage is taxable on all income
during the year.
c. Employee achievement award of P5,000 per year
d. Christmas gift of P10,000 Statement 2: A minimum wage earner who qualifies as such during the year is
C exempt from tax on all income earned during the year.
15. Statement 1: Excess de minimis is considered compensation income as "otle Which is correct?
benefits for rank and file employees and managerial or supervisory employees a. Both statements are correct.
Statement 2: Excess de minimis is a fringe benefit subject to the fringe benefit Ill b. Both statements are incorrect.
a. Statement 1 is correct. c. Both statements are incorrect. c. Only statement 1 is correct.
b. Statement 2 is correct. d. Both statements are correct. d. Only statement 2 is correct.
B 16. Which is considered compensation?
Multiple Choice - Problems: Part 1
a. Reasonable amounts of pre-computed daily transportation allowance
b. Cost-of-living allowance A 1. Johnny received a salary of 73,000 during the year consisting of: P60,000 basic
c. ~u~tation_ allowance for employees working at distant facilities salary, P8,000 overtime pay and P5,000 13th month pay. Compute Johnny's
taxable income using contemporary tax regulations.
d. Car incentives to medical doctors required to report on duty anytime MWE
C a. P O c. P 68,000
17. Which of the following ti . . b. P60,000 d. P 73,000
R . remunera on is an item of compensation income?
a. Retainer fees of an outside director
b. Customer tips B 2. Mr. Juanito had the following income in 2024:
c. Commissions to a minimum wage earner
d. Referral fee to a customer Compensation Income, net of P77,000 SSS,
C Phil Health, HDMF and union dues P 300,000
l8. Night differential pay is 30,000
a. rank and file e,,,_'empt from taxation when received by a Supplemental compensation income
25,000
b. speial. ,, 'PIOyee. c.minimum wage earner 13 month pay and other benefits
· ecialemployee. d.2
.managerial or supervisory employee.
C 19. Which is not subject tothe pg ayee! What is the taxable compensation income? 300000+30000
a. 13th month pay ®P90,000 exemption threshold for a private empl@ a. P402,000 c. P375,000
b. Cash gift c.Profit sharing bonus b. P330,000 d. P380,000
d. Productivity incentive

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Chapter 10 - Compensation Income
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10- Compensation Income
C 3. The following relates to an annual payroll of the employee: profit sharing bonus
240,000
Gross compensation income, before P44,000 13th month pay
95,000
contributions to SSS, PHIC and HDMF P 1,068,000 Determine the taxable compensation Income.
Additional compensation 45,000 a P1,365,000 c.P 1,335,000
13th month pay and other benefits 89,000 ~ P1,350,000 d.P 1,330,000
Compute the taxable compensation income. 1,068,000+45000-44000
g. A supervisory employee had the following remunerations during the year:
a. Pl,113,000 c. P 1,069,000 C
b. P1,112,000 d. P 1,068,000 Salaries, before P24,000 SSS, Phi!Health
HDMF, and union dues P 258,000
A 4. Colyong, a government employee, receives a full 13th month pay of P2,, Profit sharing 20,000
exclusive of P14,000 other benefits. He was deducted P18,000 during the ye,,,, Fringe benefits 65,000
premium for his SSS, PHIC, and HDMF contributions. Compute Colyong's tau 13 month pay and other benefits 21,000
compensation income.
a. P222,000 c. P240,000 20000X12-18000 What is the taxable compensation income?
b. P226,000 d. P254,000 a. P343,000 c P 254,000
B b. P 278,000 d. P 204,000
5. An employee received the following compensation during the year:
9. An employee had the following details of compensation Income in 2024:
Gross compensation (Pl 1,000 x 13 months) p 143,000 A
Overtime pay Regular compensation Income P 780,000
Less: 12,000
Overtime pay 43,000
SSS, PHIC, HDMF and union dues P 13th month pay 65,000
5,200
Withholding tax
Netpay 10000 15.200 De minimis benefits:
E 132,800 Medical assistance to employee 22,000
Compute the taxable compensation income. 11000X12+1200-5200 Total of other de minimis benefits 32,000
a. P149,800 c. P132,000
b. Pl38,800 d. P126,800
:.
Compute the taxable compensation mcome iftht
I e eemployee is a rank and file.
C a. P842,000 c p 823,000
6. A private employee retired at 60 in the middle of the year and was paid the b. p 836,000 d. p 780,000
following remunerations:
B .
10. Compute the taxable compensation .
inco me If the employee Is a managerial or
Retirement benefits
P2,000,000 supervisory employee.
Terminal leave pay (150 accumulated days) a. P 842,000 c. P 823,000
Compensation, net of P16,000 120,000
b. P 836,000 d. p 780,000
SSS, PHIC and HDMF premium contributions
Mid-year bonus 128,000
Pro-rated 13th month pay 8,000 A Multiple Choice - Problems: Part2 ,tsduring the year:
. d th following bene ts un
12,000 1. A managerial employee receive e p 1 080 ODO
Compute the taxable compensation income. 128000+8000+(120000X140 Compensation income, net of man d a tory contribution »' '·
a. P2,170,000 c. P 170,000
/150+12000)-90000 Housing allowance in addition to regular P), 360,000
b. P238,000 d. P 136,000
C (P30,000 x 12; actual rent is P25,000/mon
95,000
7. A managerial employee d th . 13th month pay
I
receive e following remunerations:
Gross salaries, net of SSS, PHIC, and HDMF
: 'come?
What is the taxable compensation ,jo 1080+5X12+(95-90)
SSS maternity benefits P 1,090,000 a. P 1,445,000 c. P l,l • 000
30,000 b. P 1,175,000 d.P 1,085,
372 1090000+240000+5000 373

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 Chapter 10 - Compensation Income I f IIi'
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ter 10 - Compensation Income

l;
2. An employee received the following remunerations aside from th b
°2asic p»,
Cha
12000+5000 it4'I'
C
I

Fixed representation and transportation allowance P 24,000 "

compute the supplemental compensation.
1· , P25,000
i.{l
c.P 17,000 . 1·1.1· .·,·
Night shift differential pay 12,000 1,:

Hazard pay 12,000

b. p 22,000 d. P 10,000 [; :,· I
• 1•
yj'I 1 [:
Honoraria
Profit sharing
8,000
24,000
Dg Compute the taxable compensation income.
a. p 586,000 C. P 557,000 519000+17000=536000
[[
I ; P·l
13th month pay 18,000 b. p 572,000 d. P 536,000 [fl{
Compute the supplemental compensation if the employee is a ]al
I ' ,If

a P 68,000 c. p 56,000 regular ernp~ D 9, A government employee received the following benefits in 2024:
#v
12K+12K+8K+24K 1,· 1
! .1•
Gross salaries P 1,044,000 1044K-62K p!-]
b. P 44,000 d. P 32,000
=982000 i'I
D 3. Compute the supplemental compensation if the employee
earner.
.
1s a minimum w,
RATA
PERA
Additional compensation (ADCOM)
12,000
24,000
24,000
:}
:il_i:j,:,I
87K+5K+24K+100X12
.,1
•'I! II
', I!
l
a. P68,000 c. p 56,000 Christmas bonus 87,000 , •I•

b. P 44,000 d. P 32,000 Christmas gift 5,000 =27200 ] •' I

I· ·II
Laundry allowance (P400/month) 4,800
C Contributions to GSIS, Phil Health and HDMF 62,000 1009200
!,' ·111
.. :• I
4. A supervisory employee is a recipient of a stock option which vested d .
year. The following data pertains to the exercise of the option and 'ts ~~ Determine the taxable compensation income.
1009200
; ll
sale by the employee: I SUu""'fllll
a. P1,071,200
b. P 1,068,000
c. P 1,044,000
d. P 1,009,200
)4
:' A}
Value of stocks at vesting date
P 45,000
. •' '
Exercise price of option ;»
i
30,000 D 10. A private employee had the following remuneration in 2024:
Selling price of stocks

Compute the supplemental compensation

50,000
Gross salaries, net of Pll,000 mandatory contribution P 314,000 ll I
Fixed RATA 12,000 I

C
a P 50,000
b. P 20,000
c. p 15 000 .
d. p o 45K-30K Cost-of-living allowance
13th month pay
24,000
28,000
Christmas gift 5,000
5. The following relate to the compensation
employee during the year: Income of a private rank and fie Laundry allowance (P500/month) 8,000

Annual compensation income Answer the following questions: 314K+24000

13th month pay P 540,000 24K+5K What is the taxable compensation income?
14th month pay 45,000 a. P314,000 c. P 338,000
45,000
CC,I"2;;""+e
Christmas gift y
26,000
12,000
B ll.
b. P 326,000 d. P 350,000

What Is the total exempt de mlnimis benefit?

SSS, Phil Health and HDMF 'b 8,000 a. P 13,000 c. P 6,000
contributions 21,000 b. P 8,600 d. P 5,000 300X12+5000
Compute the exempt d . . B
a. P 18,000 1e minimis benefits, 12. What Is the total exempt benefit? 28000+5000+3600+12000
b. P 24,000 c.P 29,000 a. P 36,000 c. P 5S2,000
d. P 50,000
90000 b. P47,600 d. P 90,000
D B
6. Compute the total non-
a. P O taxable compensation income
29000 3. Jane, a recipient of minimum wage, became a regular employee at the start of the
b. P90,000 c. P111,000 third quarter of 2024 when she received a raise in pay:
d. P 140,000

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 Chapter 10 - Compensation Income
1st Otr 2nd Otr 3rd Otr _4th n.... er 11 - Fringe Benefit Tax
Compensation income P 24,000 P 24,000 P 33,000 ~ Cha t
Overtime pay 4.000 5,000 3,000 6,
13th month pay CHAPTER 11
9,500
Less: FRINGE BENEFIT TAX
SSS, PHIC, and HDMF 1,000 1,000 1,200 1,200
Creditable WH tax 1000 2.00Q (chapter Overview and Objectives
Net pay P 27.000 P 28 000 P 33.800 P.45,30p

Compute the taxable compensation income in 2024.

Sao one me sanslaa,l%,
subject to final fringe benefit tax and the procedural computations of the fringe
a. P52,100 c. P 75,000
benefit tax.
b. P72,600 d.P 127,600
After this chapter, readers are expected to demonstrate:
B 14. A regular employee became a minimum wage earner when the minim 1. Understanding of the nature of fringe benefits
was increased effective the last quarter of 2024: um-.
2. Appreciation of the convenience of the employer rule and hybrid expense
1st Qtr 2nd Qtr 3rd Qr .4th Qtr 3. Ability to distinguish exempt benefit, partially exempt, and fully taxable fringe
Compensation income P 24,000 P 24,000 P 24,000 P 24,750 benefits
Overtime pay 4,000 5,000 3,000 6,000 4. Understanding of the scope of the final fringe benefit tax
13th month pay S. Knowledge of the characteristics of fringe benefits tax
8,063
Less: 6. Understanding of the procedures of fringe benefit tax computation
SSS, PHIC, HDMF 1,000 1,000 1,000 7. Comprehension of the general rules on monetary value
1,100
Creditable WH tax 1100 1100 1100 1.200 8. Comprehension on monetary value rules as applied to actual scenarios
Net pay P 25,900 P 26 900 P 24900 P 36,513 9. Mastery of the procedures for the computation of the fringe benefit tax
Compute the taxable compensation income in 2024. 10. Knowledge of the I ist of exempt fringe benefits
a. PO c. P 81,000
b. P 29,650 d.P 110,650 FRINGE BENEFITS
Under labor laws, fringe benefits pertain to all other benefits or incentives of
employees other than the basic pay. The basic pay is the fixed regular salary or
wages of employees every payroll period.
Under the NIRC, the term "fringe benefit" was defined to pertain to goods, services
or other benefits furnished by the employer to the employees.

Tax treatments of fringe benefits .

Under current tax rules, however, items of fringe benefits in the strict sense are
treated differently depending on their nature:
For example.
a. Fringe benefits that are fixed every payroll period are considered regular
Compensation.
For example: Fixed transportation allowance
Fringe benefits that are variable and performance-based are considered
supplemental compensation.
For example: commission, profit sharing and overtime pay
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