productivity or incentive bonuses, loyalty awards, gifts in cash or in kind, and other
benefits of a similar nature actually received by officials and employees of both
government and private offices.
Also, facilities and privileges of relatively small value or de minimis benefits are
excluded from the computation of gross income. These are monetized unused vacation
leave credits of employees not exceeding ten (10) days during the year; medical cash
allowance to dependents of employees not exceeding P750.00 per employee per
semester or P125 per month; rice subsidy of P1,500.00 or one (1) sack of 50-kg. rice per
month amounting to not more than P1,500.00; uniforms and clothing allowance not
exceeding P4,000 per annum; actual yearly medical benefits not exceeding P10,000 per
annum; laundry allowance not exceeding P300 per month; 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 P10,000.00 received by the employee under an established written
plan which does not discriminate in favor of highly paid employees; gifts given during
Christmas and major anniversary celebrations not exceeding P5,000 per employee per
annum; flowers, fruits, books, or similar items given to employees under special
circumstances, e.g., on account of illness, marriage, birth of a baby, etc.; and daily meal
allowance for overtime work not exceeding twenty five percent (25%) of the basic
minimum wage.
In the computation of the P30,000 ceiling, the 13th month and other benefits, these de
minimis benefits are treated separately. Although there is no ceiling for the de minimis
benefits, the regulations provide for a limit in the amount of each de minimis benefit. Any
excess over the de minimis ceiling shall be considered in the computation of other
benefits. Also, any benefit that is not within the enumeration, having no threshold, is
generally considered as other incentives and is therefore subject to the P30,000
ceiling.
In all, what are excluded from gross income are de minimis benefits up to certain limits
and 13th month and other bonus up to P30,000. Amounts in excess of the limits form part
of the employees taxable income and are, therefore, subject to income tax.
We could only hope that our authorities would push for the total exemption of these
incentives, or at least increase the threshold of exclusion. After all, the tax code does
provide that the ceiling may be increased through rules and regulations issued by the
Secretary of Finance, upon recommendation of the Commissioner, after considering,
among others, the effect on the same of the inflation rate at the end of the taxable year.
With the seemingly unstoppable hiking of prices of oil and consequently other basic
commodities, every peso of increase in the take home pay of the worker is useful.
Many regard as noble the effort of our legislators to alleviate the condition of the working
class through the latest amendment of our income tax law. A revamp of our rules on
incentives and bonuses on top of the basic wages would be most welcome. Somehow,
with these measures, as more workers become more motivated, they become more
productive. In the end, what is achieved is a rise in the standard of living and an
improved quality of life for all.