Choosing The Perfect POS Software: What Set Of Guidelines To Consider?
It takes a lot of consideration to run your retail business smoothly. …
Most income is taxable, especially when you earned it during employment. In the same way, you generally have to pay tax on income derived from selling goods or providing services for. Payroll services are fully aware that there are taxable incomes with a certain threshold for tax considering time and attendance. But not all have tax payments attached to it. There are also certain types of income that are excluded from tax like an income in which somebody has already paid tax on.
What about the 13th month pay and other forms of bonuses? For others, 13 may be an unlucky number but 13 has now been a source of good news and blessings in the Philippines. It started out when minimum wage earners during the 1970s struggled to put food on the table when the cost of living increased, thus the 13th month pay was signed into law by Former President Ferdinand E. Marcos. Since then, a great deal has happened in the area of labor law and employee relations.
The emergence of the Tax Reform and Acceleration and Inclusion (TRAIN) act law that took effect on January 1, 2018 changed and revolutionized many aspects of the old labor law. The TRAIN law affects the employee’s income tax return rates, value-added tax regulations, new estate tax rates, other excise taxes and donor’s tax rates. Payroll services had to adapt to this change and implement it as required by law.
Along with the 13th month pay law, 13th month pay is now non-taxable given a threshold for tax from the employers. The law stipulates an exemption on 13th month pay and also other bonuses and it has been increased from P82,000 to P90,000. As such, benefits including 13th month pay, fringe benefits and other benefits below P90,000 generally are non-taxable income.
In addition, to protect employees from seemingly abusive employees, the Productivity Incentive Bonus under Republic Act 6971 and the Social Amelioration Program Cash bonus for sugar industry employees has been created and approved which is stipulated under Republic Act 6982. These two types of bonuses are examples of law-regulated bonuses
The Philippine government has mandated the 13th month pay and bonuses discretionary according to the employer. It is important for the company’s payroll services to observe this. And also significant for the employee to determine the correct amount of money that they are entitled to receive as their 13th month pay.
Consider this example:
An employee has worked for a particular company for 10 months out of the twelve months. The 13th month pay is certainly based on the employee’s tenure of service. If the basic salary is P30,000, the compensation is prorated for ten months, from the 12 month-period. Take note that the basic salary is the earnings given to an employee before deductions, contributions and other employer deductions like personal loan, unpaid leaves and tardiness. The computation of the 13th month pay based on the basic salary is shown below:
P30,000 x 10 months = P300,000 /12 = P25,000 (13th Month Pay)
Other than the 13th month pay, there are bonuses which are company- initiated.
Speed up your payroll services now and go digital.
For more information, call us now at +63-32-256-2904 or +639088601619 or leave us a message here