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Business Math Lesson1 Week 4

The document discusses benefits provided to wage earners. It defines taxable and non-taxable benefits, as well as de minimis benefits which are small benefits not considered taxable compensation. It also outlines standard deductions from an employee's gross earnings, including social security, PhilHealth, and PAG-IBIG contributions as well as withholding tax. Formulas are provided for calculating employee contributions and withholding tax amounts.

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REBECCA BRIONES
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559 views6 pages

Business Math Lesson1 Week 4

The document discusses benefits provided to wage earners. It defines taxable and non-taxable benefits, as well as de minimis benefits which are small benefits not considered taxable compensation. It also outlines standard deductions from an employee's gross earnings, including social security, PhilHealth, and PAG-IBIG contributions as well as withholding tax. Formulas are provided for calculating employee contributions and withholding tax amounts.

Uploaded by

REBECCA BRIONES
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Benefits Given to Wage Earners

L
E Learning Competencies
S At the end of this lesson, you are able to:

S Define each of the benefits given to wage earners.


(ABM_BM11SW-IIe-5)
Distinguish taxable from nontaxable benefits
O (ABM_BM11SW-IIe-6)
Enumerate the standard deductions with the
N corresponding computation.
(ABM_BM11SW-IIe-7)

Benefit is a payment or gift made by an employer, the state or


insurance company.

LESSON PROPER

BENEFITS OF A WAGE EARNER

1. Long Term Benefits: Retirement, Death , Disability


2. Minimum Wage Earner Tax Exemption (RA 9504)
3. Bonuses and Allowances (e.g. travel, rice, meal, clothing, and laundry)
4. 13th month pay, 14th month pay, Holiday Pay, Special Pay, Overtime Pay,
Night Shift Differential Pay and Hazard Pay
5. Leave Incentives: Sick Leave, maternity Leave, Paternity Leave, Solo
Parent and other
6. Health Related Benefits and insurances.

TAXABLE AND NON TAXABLE BENEFITS

Taxable benefits are benefits provided to employees that the


employer has to add to the employee’s income each period to determine
the total amount of income that is subject to source tax deductions. Some
examples of taxable benefits include transit passes, boarding, lodging, rent-
free or low-rent housing, use of a company vehicle for non-work related
purposes, group insurance premiums paid by the employer, and gym
memberships paid for or subsidized by the employer.
Compendium of Notes: Business
Mathematics
Non-Taxable benefits are not taxed or partially taxed benefits that are
completely tax free which include health insurance, retirement services (like a
deferred compensation plan), and de minimis benefits, which are those that
cost only minimal amounts.

DE MINIMIS BENEFIT

De Minimis Benefit are benefits relatively small value provided by an


employer to the employees on top of the basic compensation intended for the
general welfare of the employees merely as means to promote their health,
goodwill, contentment or efficiency. Being of relatively small, the same is not
being considered as a taxable compensation.

1. Monetized unused vacation leave credits of private employees not


exceeding ten (10) days during the year.
2. Monetized value of vacation and sick live credits paid to government
officials and employees.
3. Medical cash allowance to dependents of employees not exceeding One
Thousand Five Hundred pesos (Php1,500.00) per employee per semester or
Two-Hundred Fifty Pesos (Php250.00) per month.
4. Rice subsidy of Two Thousand Pesos (Php2,000.00) or one (1) sack of fifty
(50)kg rice per month amounting to not more than Two Thousand Pesos
(Php2,000.00).
5. Uniform and Clothing allowance not exceeding to Six Thousand
(Php6,000.00) per annum.
6. Actual medical assistance e.g. medical allowance to cover medical and
health care needs, annual medical/executive check-up, maternity assistance
and routine consultations, not exceeding Ten Thousand Pesos
(Php10,000.00) per annum.
7. Laundry allowance not exceeding Three Hundred Pesos(Php300.00) per
month.
8. Employees achievement awards e.g. For length of service or safety
achievements which must be in the form of tangible personal property
other than cash or gift certificate with an annual monetary value not
exceeding Ten Thousand Pesos (Php10,000.00) received by the employee
under an established written plan which does not discriminate in favor of
highly employees.
9. Gifts given during Christmas and major anniversary celebrations not
exceeding Five Thousand Pesos (Php5,000.00) per employee per annum.

Compendium of Notes: Business


Mathematics
10. 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.
11. Benefits received by the employee by virtue of a collective bargaining
agreement (CBA) and productivity incentive schemes provided that the
total annual monetary value received from both CBA and productivity
incentive schemes do not exceed to Ten Thousand (Php10,000.00) per
employee per taxable year.

Employers are not obliged to give this kind of benefits but they are
encouraged to do since these benefits are no matter how small are a
Note:
big help to the workers.

STANDARD DEDUCTIONS OF A WAGE EARNER

Standard Deductions that are mandatorily applied on the gross earnings of an


employee.

1. SOCIAL SECURITY SYSTEM (SSS). The SSS was created to provide private
employees and their families protection against disability, sickness, old age and
death.
Based on employee’s gross monthly pay, both the employer and
employee remit monthly contribution to the SSS. In turn, the employee
receives the following benefits from the SSS.

 Maternity pay
 Retirement pay
 Sickness or disability benefits
 Death or pension benefits.

The contribution that an employee remits are his or her savings, which will serve as
basis for the granting of the mentioned social security benefits in times of
contingencies.

Compendium of Notes: Business


Mathematics
2. PHILHEALTH CONTRIBUTION. For all employees covered by the SSS, a
medical benefit is also mandatorily given. This is where the employee’s PhilHealth
contribution are used. The government mandates that both the employer and employee
should contribute equal monthly premiums to PhilHealth.

EXAMPLE:

If Robert is earning Php10,500.00 monthly, how much is his monthly PhilHealth contribution?

Solution: Since Robert’s salary is Php10,500.00, it falls within the range of Php10,000.00-
Php60,000.00. then, the total PhilHealth contribution is 3.5% of his monthly salary, that is

0.035(10,500)=Php367.50

The PhilHealth contribution is divided equally to the employer and employee. Then, the
PhilHealth contribution by Robert is

Php 367.50
= Php183.750
2

Compendium of Notes: Business


Mathematics
3. PAG-IBIG CONTRIBUTION. Home Development Mutual Fund (HDMF) also
known as the PAG-IBIG Fund is a provident savings system supplying housing
loans to private and Philippine government employees and self-employed persons
who elect to join the fund.

EXAMPLE:

If Robert is earning Php10,500.00 monthly, how much is his monthly PAG-IBIG contribution?

Solution: Since Robert’s salary is Php10,500.00, it falls within the range above
Php5,000.00. Therefore, his monthly PAG-IBIG contribution is P100.00

4. WITHHOLDING TAX. The amount that an employer withholds from an


employee’s wages and pays directly to the government. The amount withheld is credit
against the income tax the employee must pay during the year. Basic monthly salary
below Php20,833.00 are nontaxable.
The monthly withholding tax (Tw) of an employee can be computed as follows;
T W =T base +r tax ¿E)
Where:

 T base is the base tax


 r tax is the tax rate
 I taxis the taxable income
 E is the personal exemption
Taxable Income-is the percentage of an employee’s salary that should be subjected to
tax. The taxable income for a wage earner can be computed as follows;
I tax=Total Gross earning−Total deductions
BIR WITHHOLDING TAX TABLE

Compendium of Notes: Business


Mathematics
EXAMPLE:
Determine the monthly withholding tax of Angelo who has upon paying all the deductions,
has a taxable income of Php40,000.00.
Solution:
His taxable income Itax=40,000. Follow the formula in solving for the withholding tax.
T W =T base +r tax ¿E)
50,000 falls under Column 3, monthly compensation row.
T base =2,500, r tax =25% , E =33,333, substituting the values,
T W =2,500+ 0.25¿ 33,333)
T W =Php 4,166.75

References

https://youtube.com/watch?vQ7JIUz7nE0
Revenue Regulations No 15-2011, No 8-2012, o 11-2015
TRAIN RA 10963
Teaching Guide for Senior High School: Business Mathematics.2016.
Commission of Higher Education. pp. 124-131
www.bir.gov.ph

Compendium of Notes: Business


Mathematics

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