Mathematics 3 Week 4: Unified Supplementary Learning Materials Abm-Business Mathematics
Mathematics 3 Week 4: Unified Supplementary Learning Materials Abm-Business Mathematics
ABM-BUSINESS MATHEMATICS
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MATHEMATICS 3
WEEK 4
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UNIFIED SUPPLEMENTARY LEARNING MATERIALS
ABM-BUSINESS MATHEMATICS
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1. Define each of the benefits given to wage earners.
2. Distinguish taxable from nontaxable benefits.
3. Enumerate the standard deductions with the corresponding computation.
PRETEST
A. Identify if the statement is True or False.
1. All wage earners can avail all benefits of any wage earner.
2. Thirteenth month pay is equivalent to 1/13 of the annual salary of any
employee.
3. The total earnings of any employee is not always equal to the basic pay.
4. An employer can give 14th month pay to all his employees that is equivalent
to the 13th month pay.
5. Living allowance is a must benefit given to all employees.
6. A pregnant employees may not be qualified for a maternity leave benefit.
7. Holiday and special pays are synonymous.
8. Retirement benefit can only be availed if the age of an employee is more
than or equal to 60 years old.
9. Tax exemption benefit to minimum wage earners are only limited to the
basic salary excluding allowances.
B. State whether the following is a benefit of a wage earner or not. Write “Y” for
yes and “N” for no.
10. Special day pay 17. SSS Premium Pay
11. Travel allowance 18. Holiday Pay
12. Tax 19. 13th month pay
13. Paternity Leave 20. Rice Incentive
14. Health Insurance 21. 5 Year Service Pay
15. Motor Car Insurance 22. Living Allowance
16. Leave without Pay 23. Maternity Benefit for
all fathers
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A. Directions: Write the letter of the correct answer in a sheet of paper.
1. This are the fixed periodical payments made to persons doing or engaged in
manual work.
A. Wages B. salaries C. Honorarium D. pledges
2. These usually calculated by number of days the person has rendered
service.
A. Honorarium B. pledges C. Wages D. salaries
3. This given when a person works overtime, he is given a “time and a half”.
A. Straight time wages B. overtime wages C. wages D. Salaries
4. It is money that an individual receives in exchange for providing a
good/service or through investing capital.
A. Income B. benefit C. wages D. Salaries
5. What is the employee compensation given by an employer on top of the basic
salary/wage?
A. Income B. benefit C. wages D. Salaries
INTRODUCTION
I. BENEFITS OF THE WAGE EARNERS
Below is the list of possible benefits of a wage earner. Take note however that not
all benefits are obligatory. An example of this is when Company X gives hazard
pay while Company Y does not. This is only possible if Company X is a mining
company, and Company Y owns a Department store. The presidential Decree No.
442, also known as the Labor Code of the Philippines, provide a list of benefits for
a wage earner.
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Maternity/Paternity Benefit – this benefit can only be available by a
female or male employee when the female employee will deliver a child
and for cases that the male is needed, the male can apply for a leave as
provided in the Paternity Act of 1996 (RA 8187).
Bonuses/Allowances (travel, rice, meal, clothing, etc.) – these are some
amount given by the company to their employees for them to enjoy.
3. Maternity Benefit
Let x be the average monthly salary of the employee. Then 2.6x and 2x for
caesarean and normal delivery, respectively.
But in some case this is an example of SSS Maternity Benefit Computation:
Contingency Month/Delivery Month: February 2020
Semester of Contingency: October 2019-March 2020
12 Month Period prior to Semester of Contingency: November 2018-
September 2019
From November 2018 – September 2019, the SSS Member should have at
least 3 months contribution to qualify for the SSS Maternity Benefit.
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Get the Monthly Salary Credit of the 6 highest posted
contribution during the 12 Month Period prior to semester of Contingency
Add the 6 highest monthly Salary Credit
13,000 + 14,000 + 15,500 + 15,500 + 15,500< + 16,500 = 89,500
Divide the sum into 180 days to get the daily maternity allowance
89,500/180 = 497.22 (Daily Maternity Allowance)
Multiply the daily maternity allowance depending on the following
criteria:
– For Normal Deliver – 105 days
– For Ceasarean Delivery – 105 days
– Abortion, Miscarriage – 60 days
– Solo Parent (either Normal or Ceasarean) – 120 days
If Normal or Ceasarean Delivery, multiply the daily maternity allowance
into 105
Days 497.22 x 105 = 52, 185 (Maternity Benefit)
4. Holiday Pay
Holiday pay refers to payment of the regular daily wage for any non-working
regular holiday. Note that if employee worked on a holiday, then he will
receive twice his daily wage.
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depreciation value of the property, whichever is applicable. However, if the housing
unit is situated in or adjacent (within 50 metres) to the business premises, the
benefit is not taxable. Likewise, a motor vehicle used normally for business
purposes is not taxable.
The following fringe benefits are not taxable:
Fringe benefits required by the nature of or necessary to the trade, business, or
profession or for the convenience or advantage of the employer.
Benefits authorized by and exempted from tax under special laws.
Employer contributions for the benefit of the employee to retirement, insurance,
and hospitalisation benefit plans.
Benefits given to rank and file employees, whether or not granted under a
collective bargaining agreement. However, these are subject to WHT on
compensation, unless otherwise tax exempt.
De minimis (small value) benefits as defined and enumerated in the rules and
regulations.
In general, if a fringe benefit is granted in money or directly paid for by the
employer, the value of the fringe benefit is the amount granted or paid for. If
furnished in property and ownership thereof is transferred to the employee, the
value of the fringe benefit is the fair market value of the property as determined by
the Commissioner of Internal Revenue, pursuant to the Commissioner’s power to
prescribe real property values. If the fringe benefit is granted or furnished by the
employer in the form of a property but ownership is not transferred to the
employee, the value of the fringe benefit is equal to the depreciation value of the
property.
Capital losses are deductible only from capital gains. In computing net capital
gains or losses from other capital assets, only 50% of the gain or loss is to be
taken into account if the capital asset has been held for more than 12 months;
otherwise, 100% of the gain or loss is to be considered.
A non-resident alien is also taxed on Philippine-source investment income, such
as interest, dividends, and royalties, at the rate of 20% (for those engaged in trade
or business in the Philippines) or 25% (for those not engaged in trade or business
in the Philippines) as a final tax (or a lower treaty rate). The tax is withheld at
source, and the income is not subject to the graduated rates.
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Resident aliens are taxed on their Philippine-source income at graduated rates.
However, Philippine-source interest and royalties are taxed at 20%. Interest on
residents’ deposits under the expanded foreign currency deposit system (FCDU)
accounts is taxed at 15%, while interest on long-term deposits or investment in
the form of savings, common or individual trust funds, and other investments
evidenced by certificates, and so on, is exempt from tax, subject to certain
conditions. Interest income on FCDU accounts of non-residents is exempt from
tax. Royalties on literary works and musical compositions are subject to a final tax
of 10%. Dividend income received from a domestic corporation is taxed at 10% for
resident aliens. Tax rates for capital gains from shares of stock and real property
are the same as those for non-resident aliens.
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3.) Medical cash allowance to dependents of employees, not exceeding P750 per
employee per semester or P125 per month; (RR No. 5-2011)
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)
Uniform and Clothing allowance not exceeding P5,000 per annum; (RR No. 8-
2012)
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)
Laundry allowance not exceeding P300 per month; (RR No. 5-2011)
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)
Gifts given during Christmas and major anniversary celebrations not exceeding
P5,000 per employee per annum; (RR No. 5-2011)
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)
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)
APPLICATION OF THE “DE MINIMIS” CONCEPT
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.
To illustrate, the following tax rules may apply to all income received by an
employee:
Salaries & Wages (Basic Compensation) Income Tax Rate
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De Minimis Benefits Exempt
Excess of De Minimis (Add with 13thMonthPay
Exempt
and Bonuses = P82,000.00)
Benefits & Bonuses in Excess of P82,000.00
Income Tax Rate
Rank-And-File Employee
Fringe Benefit Tax Rate
Managerial and Supervisory
All Other Benefits Income Tax Rate
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.
SUMMARY OF THE RULES
To summarize, the following rules shall be observed in determining the taxable
amount after the “de minimis” and the P82,000.00 ceiling:
The amount included in the list of the “de minimis” shall not be considered as part
of the P82,000 ceiling of the 13th month pay, bonuses and other benefits that are
excluded from gross income in the computation of the taxable income.
The excess amount, however, of the “de minimis” benefits can be included as part
of the P82,000 ceiling and will be exempt as long as the total 13th month pay,
bonuses and other benefits do not exceed the P82,000 ceiling.
The excess amount of the “de minimis” not absorbed by the P82,000 ceiling shall
be subject to the income tax on compensation or the fringe benefit tax.
ILLUSTRATION
Mr. Alex Dumpa received the following compensation and benefits during the year
while working as a bookkeeper.
Annual Basic Salary P250,000
13th Month Pay and Bonuses 72,000
Rice Subsidy 30,000
Uniform Allowance 8,000
The following is the computation of the taxable and nontaxable compensation
income of Mr. Alex Dumpa:
Description Taxable Nontaxable
Annual Basic Salary 250,000
De Minimis Benefits:
Rice Subsidy (1,500 x 12) 18,000
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Uniform/Clothing (5,000 per
5,000
annum)
Other Benefits:
13th Month Pay and Bonuses 72,000
Excess Rice Subsidy 2,000 10,000
Excess Uniform/Clothing 3,000
Total 255,000 105,000
POST TEST
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24. Mr. Adrian’s 30-year annual basic income is given by the formula:
Y= 130,000 + 20,000 (x-1980),
Where x is the year and y is the basic income. He started working in
1981 and retired in 2010. How much is his retirement pay after 30 years
of service in the company? (Hint: to find the daily rate, find the average
annual basic income and divide it to 24 x 12).
25. Mr. Samson received an annual salary of Php 300,000. At the end of
the year, what would be his 13th month pay?
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much of his additional earnings will be taxed?
27. In connection with the previous problem, suppose a certain
government employee earns a CNA = Php 2,214.12/month, 13th month
pay = Php 12,119.72 and he has another benefits amounting to Php
4,000. How much of the additional earnings will be taxed?
28. Suppose, in the previous problem, the other benefits include clothing
allowance. Will there be a change in the amount taxable? If yes, how
much? If no, why?
29. If an employee X has CNA = Php 18,291.09, 13th Month Pay = Php
27,891.00, other benefits = Php 10,000, and Php 3,000 of the other
benefits is the clothing allowance. How much of his benefits is taxable?
How much is non-taxable?
30. Based on the previous problem, if his tax rate is 0.08, how much is
his tax and what is his net amount from his benefits?
REFERENCES
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