What are De Minimis Benefits Given to Employees?

Last Updated on October 26, 2019 by Marie Bautista

When we get our sweldo, tanggap na lang tayo ng tanggap, without figuring out how it was computed.

For instance, have you ever considered re-computing your withholding tax to find out if it would come close to the amount withheld from your salary?  You can check it now via the Withholding Tax Calculator.

Have you also wondered why some benefits you received has no bawas na withholding tax?

These benefits must be “De Minimis Benefits.”

What are De Minimis Benefits?

“De Minimis Benefits” are facilities or privileges or corporate gifts furnished or offered by an employer to his employees that are of relatively small value and are offered or furnished by the employer merely as a means of promoting the health, goodwill, contentment, or efficiency of his employees.
These Include:

1. Monetized unused vacation leave credits of private employees not exceeding 10 days during the year.
2. Monetized value of vacation and sick leave credits paid to government officials and employees.
3. Medical cash allowance to dependents of employees, not exceeding P750 per employee per semester or P125 per month.
4. Rice subsidy of P1,500 or one(1) sack of 50 kg. rice per month amounting to not more than P1,500.
5. Uniform and clothing allowance, P5,000.
6. Actual medical assistance not exceeding P10,000.
7. Laundry allowance not exceeding P10,000.
8. Employees achievement awards not exceeding P10,000 in the form of tangible personal properties other than cash or gift certificate.
9. Gifts during Christmas and major anniversary celebrations not exceeding P5,000 per employee per annum’’.
10. Daily meal allowance for overtime work and night/graveyard shift not exceeding 25% of the basic minimum wage.
11. Benefits received by an 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 combined, do not exceed P10,000 per employee per taxable year.

Important points to consider:

• Allowances which are fixed in amounts and are regularly received by the employee as part of his monthly compensation income shall not be treated as taxable fringe benefit but as compensation income.
• All other benefits not included in the enumeration shall NOT be considered de minimis benefits.
• The amount of “De Minimis Benefits” shall not be considered in the P82,000 ceiling of “other benefits” excluded from gross income.
• The excess of the De Minimis Benefits over the respective ceilings shall be considered as “other benefits” and the employee receiving it will be subject to tax only on the excess over the P82,000 ceiling.
• The Minimum Wage Earner receiving “other benefits” exceeding the P82,000 limit shall be taxable on the “excess benefit.
• Minimum Wage Earner receiving “other income,” e.g. income from trade, business, or practice of profession, except income subject to final tax, and compensation income, are not exempt from income tax on the entire income earned during the taxable year.