IMPLEMENTATION OF HIGHER CAP (P82,000) FOR TAX-

EXEMPT BONUSES AND OTHER BENEFITS

By: Atty.Roland | March 19, 2015 in Corporate and Investments, HR and Labor, Tax Law
24 Replies | Related posts at the bottom of article

There is a new cap for the exemption of bonuses and other benefits, from the former amount of
P30,000. Under Republic Act (RA) No.10653, signed into law in 2015, gross benefits received by
officials and employees of public and private entities up to a maximum amount of Eighty Two
Thousand Pesos (P82,000) are excluded from the computation of the gross income of the
recipients of such benefits, and thus, such amounts are exempt from income tax. To implement
RA 10653, the Bureau of Internal Revenue (BIR) issued Revenue Regulations (RR) 3-2015.
Heres a briefer of RR 3-2015.

What is the coverage of the exemption?

RR 3-2015 clarified that the threshold amount of P82,000 shall only apply to the 13th-month pay
and other benefits which covers only the following:

* Thirteenth-month pay equivalent to the mandatory one month basic salary of officials and
employees of the government, (whether national or local), including government-owned or -
controlled corporations, and or private offices received after the 12th-month pay; and

* Other benefits, such as Christmas bonus, productivity-incentive bonus, loyalty award, gifts in
cash or in kind and other benefits of similar nature actually received by officials and employees
of both government and private offices.

In no case shall the exemption apply to other compensation received by an employee under an
employer employee relationship, such as basic salary and other allowances.

What kind of income-earners are included under the exemption and what
period does it cover?

The exclusion from gross income is not applicable to self-employed individuals and income
generated from business. The amount of P82,000.00 shall apply to the 13th month pay and
other benefits paid or accrued beginning January 1, 2015. For benefits received last year, the
applicable threshold amount would still be the old amount of P30,000.

What are the BIR compliance requirements?

All taxpayers-employers shall ensure the correct computation and application of the said increase
on the 13th month and other benefits of the employees in the year-end adjustments, and the
same shall be clearly indicated, among others, in the Certificate of Compensation/Tax
Withheld (BIR Form No. 2316).

The said BIR form shall be issued by the employer to the employee on or before January 31 of
the succeeding calendar year, or if the employment is terminated before the close of such
calendar year, on the day the last payment of compensation is made.
What happens if the employee works for another company within the year?

If the employee whose employment was terminated is subsequently employed by another

employer before the close of the calendar year, the employee is required to furnish the new
employer the accomplished BIR form issued by the previous employer for the appropriate
withholding tax computation of the employees regular compensation and subsequent year-end
adjustment, if any.

Does Congress need to pass a new law to increase the cap again?

Under the law, the President has the authority to adjust the threshold amount every three years
stated to its present value using the Consumer Price Index (CPI) to be published by the National
Statistics Office (NSO).

Related Posts:

1. New Law Increasing the Exemption for 13th Month Pay and Other Benefits
(Republic Act 10653)
2. Increase of Tax Exclusion to P82,000 for 13th Month Pay and Other Benefits
(BIR Revenue Regulations No. 3-2015; Full Text)
3. FAQ on 13th Month Pay
4. Christmas Bonus vs. 13th Month Pay
5. Primer on Wage Order No. NCR-19 (15-Peso Increase in Minimum Wage)