TAXABLE BA ANG CHRISTMAS BONUS MO?

TAXABLE BA AND CHRISTMAS BONUS MO?

by: Ione Baron-Mejia

Ho! Ho! Ho! Merry Christmas!!

This is to answer  your burning question this Christmas Season...Taxable ba ang Christmas bonus ko? 

1. Una, linawin natin. Ano ba yong Christmas bonus?

Answer:

Bonus - an extra amount of money that is given to you as a present or reward for good work as well as the money you were expecting:

a productivity bonusa Christmas bonusThe company used to give discretionary bonus payments.

( Dictionary.org)

Christmas bonus  is a form of present or gift, or renumeration given by employers to it's employees every December during Christmas time.

Remuneration means?

Remuneration is the compensation that one receives in exchange for the work or services performed. Typically, this consists of monetary rewards, also referred to as wage orsalary.^[1] A number of complementary benefits, however, are increasingly popular remuneration mechanisms. Remuneration is one component of reward management. ( Wikipedia.org)

2. We were given gift in kind, is it still considered christmas bonus?

Answer: Yes. Christmas bonus can be given on cash or in kind.

3. Is Christmas bonus taxable or  is it tax exempt?

Answer: It depends how much you received. BIR Revenue Regulation 5-2011 ( further amending BIR RR 2-98 and 3-98 as last amended by RR 5-2008 with respect to "De Minimis " benefit ),   states that : Gifts given during christmas and major anniversary celebrations not exceeding five thousand pesos (P 5,000) per employee per annum is EXEMPT from tax. Hence, any excess in the Five thousand pesos (P 5,000) threshold shall be lodged under the Thirty Thousand ( P30,000) statutory exemption and if it exceeds the statutory allowance it shall be taxed accordingly.

BIR Chief Henares explains it clearly:

http://www.gmanetwork.com/news/story/339490/economy/companies/13th-month-pay-bonuses-below-p30k-are-tax-exempt-bir-chief-henares

Internal Revenue chief Kim Henares on Thursday reminded government agencies and private firms that 13th month salaries, bonuses and benefits not exceeding P30,000 are exempted from tax.

On the other hand, any amount exceeding P30,000 would be subjected to tax.

Henares' reminder came at a time when companies are starting to hand out 13th month pay as well as holiday and year-end bonuses to their employees.

"For example kung sinuma mo lahat bonuses mo whatever you call it... kunwari total bonuses for the year is P40,000, P30,000 is exempted and P10k lang binubuwisan," Henares told reporters at the Department of Justice in Manila.

"Iyon lang ang nasa batas kaya iyon lang i-implement ng BIR," she added, saying that the tax rule should be implemented "across the board."

Henares emphasized that the rule on tax exemptions applies to all workers whether in the private or public sectors.

"So if you are in government, whether executive or legislative or judiciary branches... the rules are the same," Henares said.

The Revenue chief said companies and their accountants should be "conscious and mindful" of this tax exemption rules or risk being held criminally liable "for not withholding properly."

She also reminded income earners to indicate in their annual income tax returns details on their 13 month pay, bonuses, and benefits as well as the corresponding deductions if any.

Henares was earlier quoted as thumbing down a proposal made by Senate president pro-tempore Ralph Recto to raise the tax exemption for bonuses to P75,000 from the current P30,000.

Henares said Recto's proposal cannot be implemented unless there is a law that would determine an alternative source for the billions of pesos that the government stands to lose from implementing a higher tax exemption ceiling. —KG, GMA News

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