Department of Education
Region III
DIVISION OF MABALACAT CITY
Name: __________________________________ Grade & Strand: ______________
School: _________________________________ Date: ________________________
LEARNING ACTIVITY SHEET
ABM 11 Business Mathematics (Q2-WK4)
Taxable and Nontaxable Benefits
I. Introduction
In your previous learning activity sheet, you have known the benefits that
can be received by a wage earner. Those benefits can either be taxable or
nontaxable. One example of these is the cash incentive that a company
gave to the employees who had performed exceptionally. Is it applicable for
tax deduction or tax exemption? What are the benefits that taxable and
nontaxable? In this learning activity sheet, you will distinguish taxable and
nontaxable benefits and enumerate the standard deductions with the
corresponding computations.
II. Learning Competency
1. Distinguish taxable from nontaxable benefits. ABM_BM11SW-IIe-6
2. Enumerate the standard deductions with the corresponding
computation. ABM_BM11SW- IIe-7
III. Objectives
At the end of this learning activity sheet, you are expected to:
1. Enumerate the benefits that are taxable and nontaxable.
2. Enumerate the standard deductions of a wage earner.
3. Solve problem involving taxable and nontaxable benefits.
IV. Discussion
As stated in the amended Revenue Regulation No. 11-2018 of the Bureau
of Internal Revenue, the following shall be considered as “de minimis”
benefits not subject to income tax as well as withholding tax on
compensation income of both managerial, and rank and file employees:
1. Monetized unused vacation leave credits of private employees not
exceeding ten (10) days during the year.
2. Monetized value of vacation and sick leave credits paid to
government official and employees.
3. Medical cash allowance to dependents of employees, not exceeding
₱1,500 per employee per semester or ₱250 per month.
4. Rice subsidy of ₱2,000 or one (1) sack of 50 kg. rice per month
amounting to not more than ₱2,000
5. Uniform and clothing allowance not exceeding ₱6,000 per annum.
6. Actual medical assistance, e.g. medical allowance to cover medical
and healthcare needs, annual medical/executive check-up,
maternity assistance, and routine consultations, not exceeding
₱10,000 per annum.
7. Laundry allowance not exceeding ₱300 per month.
8. Employees achievement awards, e.g for length service or safety
achievement, which must be in the form of tangible personal
property other than cash or gift certificate, with an annual monetary
value not exceeding ₱10,000 received by the employee under an
established written plan which des not discriminate in favor of highly
paid employees.
9. Gifts given during Christmas and major anniversary celebrations not
exceeding ₱5,000 per employee per annum.
10. Daily meal allowance for overtime work and night/graveyard
shift not exceeding twenty-five percent (25%) of the basic minimum
wage on a per region basis.
This means that if the “de minimis” benefits exceeds on the stated amount,
then it is subject to tax.
The following are some standard deductions of a wage earner.
1. Withholding Tax- amount contributed by any wage earner to the
government.
2. Philhealth- providing discounts when it comes to health-related
problems.
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3. PAG-IBIG- providing monetary assistance for lands or mortgages.
4. SSS Premium/ GSIS – collects annual/quarterly/monthly
contributions from its members to ensure that they will receive their
benefits.
5. PAG-IBIG/SSS Loan
6. Retirement Fund
7. Charges/Miscellaneous-can be deductions made by the employer for
some other reasons (e.g. tardiness/absences).
Problem Solving
Example 1. Angela is a government employee and has ten (10) days of sick
leave credits and eight (8) days of vacation leave credits. Her daily rate is
₱490 and she only availed 2 days of sick leave and 3 days of vacation leave.
How much will be her additional earnings and how much of it will be
taxed?
Solution:
Step 1: Solve for the remaining leave credits.
Sick leave 10-2 = 8 Vacation Leave 8-3 =
5
Step 2: Add the remaining leave credits: 8+5 = 13
Step 3: Multiply to daily rate: Total earnings = 13×₱490 = ₱6,370
Therefore, Angela will receive additional earnings of ₱6,370 and will not be
taxed since she is a government employee.
Example 2. Marlon received Christmas bonus of ₱10,000 from his
employer. How much of the bonus is taxable? How much is her tax payable
if her tax percentage is 20%? How much will be her net income from the
bonus?
Solution: Christmas bonus = ₱10,000 Tax percentage = 20%
Step 1: Since any amount exceeding ₱5,000 is taxable, then
₱10,000- ₱5,000= ₱5,000
Step 2: Multiply the difference in step 1 to .20: ₱5,000×.20 = ₱1,000
Step 3: Subtract the product to his Christmas bonus:
₱10,000 - ₱1,000 = ₱9,000
Thus, his additional earnings is ₱9,000.
Example 3. Anton was given living allowance by his employer. His living
allowance includes clothing, laundry, daily meal, and transportation. How
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much of the additional earnings will be taxed if his living allowance is
₱7,000 and each part in the definition is 0.25 of the living allowance?
Solutions: Allowances that are not included in de minimis benefits are
considered taxable.
Equation: Living allowances = clothing + laundry + daily meal +
transportation
Every part is 0.25 of the living allowances so, we have 0.25x where x is the
amount of the living allowance.
Step 1: Substitute the value of x to find the part of the living allowance.
0.25x = 0.25(₱7,000) = ₱1,750
Step 2: The taxable portion is the sum of the taxable parts.
₱6,000
Clothing allowance = = ₱500
12 𝑚𝑜𝑛𝑡ℎ𝑠
Laundry = ₱1,750 – 300 = ₱1,450
Daily Meal = ₱1,750
Transportation = ₱1,750
Step 3: Add the results in Step 2 to find the living allowance that is taxable.
₱500 + ₱1,450 + ₱1,750 + ₱1,750 = ₱5,450
Therefore, the portion of the living allowance which is taxable is ₱5,450.
Example 4. Marta’s earning has a tax percentage of 20%. Twenty percent
of his total allowances comes from Christmas gifts, all other allowances are
not taxable, and his total allowance is 14% of his basic pay (less the
allowance) which is ₱100,000. What is his total earning and how much is
his tax?
Solution: Let E be the total earnings, B be the basic pay, A be the total
allowances and let t be the tax.
Step 1:
To find the total earnings add the basic pay and total allowances.
So, the equation is E = B+A
His total allowance is 14% of his basic pay (less the allowance) which
is ₱100,000. So, the equation is A = 0.14B = ₱100,000.
To find the basic pay B, we can derive the equation from the total
allowance 0.14B = ₱100,000. Divide both side by 0.14. So, the
₱𝟏𝟎𝟎,𝟎𝟎𝟎
equation is B = .
𝟎.𝟏𝟒
₱𝟏𝟎𝟎,𝟎𝟎𝟎
Step 2: Solve for B. B= = ₱714,285.71
𝟎.𝟏𝟒
Step 3: Solve for E. Substitute the values of A and B.
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E = B+A = ₱714,285.71 + ₱100,000 = ₱814,285.71
Thus, his total earnings is ₱814,285.71.
Step 3: Solve how much is her tax t.
Solve how much is her Christmas gifts. Since twenty percent of his
total allowances comes from Christmas gifts, so the equation is
0.20A.
Christmas gifts = 0.20A = 0.20(₱100,000) = ₱20,000.
Refer to item 9 on page 2. It says that Christmas gifts is non-taxable
if it does not exceed ₱5,000. Since the Christmas gifts of Marta is
₱20,000, subtract ₱5,000 from it.
₱20,000-₱5,000 = ₱15,000
Step 4: Solve for t.
t = 0.20(B + ₱15,000)
t = 0.20(₱714,285.71 + ₱15,000)
t = 0.20(₱729,285.71)
t = ₱145,857.14
So, her tax is ₱145,857.14.
V. Activities
It is now your turn to answer different activities to enhance your knowledge
about the lesson.
A. Write TRUE if the statement is true otherwise write FALSE.
1. All allowances are non-taxable.
2. If the monthly clothing allowance is ₱400.00, then the taxable
amount for clothing allowance is ₱1,200.
3. Allowances are considered part of the earnings.
4. Nontaxable benefits include all monetized leave credits.
5. Some bonuses or allowances are non-taxable.
6. All benefits of government officials and employees are non-taxable.
7. Taxes are added in the deduction.
8. Laundry allowance of ₱500 per month is non-taxable.
9. If the clothing allowance is ₱8,000, then the taxable amount is
₱2,000.
10. Medical cash allowance to dependents of employees are taxable.
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B. Solve the following problems. Show your solutions.
1. Mr. Martin is a government employee and was given 10 days of
vacation leave credits and 10 days sick leave credits. He used 3 days
of sick leave credits and 5 days of vacation leave. How much will be
his additional earnings and how much of it will be taxed if his daily
rate is ₱650.
2. Mr. Antonio is a public employee and received a benefit of
₱14,567.80 because of his excellent performance of one year.
Given the formula below:
Performance benefit + 13 th month pay + other benefits > ₱25,000 are
taxable.
Suppose his 13th month pay is ₱23,980.50 and he has no other
benefits, how much of his additional earnings will be taxed?
3. In connection with the previous problem, suppose a certain
government employee earns a performance benefit = ₱2,340/month,
13th Month Pay = ₱15,780.43, and he has other benefits amounting
to ₱6,000. How much of the additional earnings will be taxed?
4. In the previous problem, suppose the other benefits include clothing
allowance. Will there be a charge in the amount taxable? If yes, how
much? If no, why?
5. Based on the previous problem, if his tax rate 15%, how much is his
tax and what is his net amount from his benefits?
VI. Assessment
A. Multiple Choice. Read each question carefully then write the letter of the
best answer from the given choices. Use separate sheet of paper for your
answer and solution.
1. Which of the following statement is TRUE?
A. Monetized unused vacation leave credits of private employees not
exceeding ten (10) days during the year.
B. Monetized value of vacation and sick leave credits paid to
government official and employees are taxable.
C. Medical cash allowance to dependents of employees are not
taxable.
D. Rice subsidy of ₱1,500 or one (1) sack of 50 kg. rice per month
amounting to not more than ₱1,000.
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2. Ermie received clothing allowance of ₱6,500. How much is the taxable
amount?
A. ₱500 B. ₱1,000 C. ₱1,500 D. ₱2,000
3. Ria gave birth to his son. She received a maternity assistance amounting
to ₱14,790. How much is the taxable amount?
A. ₱1,560 B. ₱2,340 C. ₱3,470 D. ₱4,790
4. Which of the following statement is non-taxable?
A. Unused vacation leave credits of private employees for 5 days.
B. Uniform and clothing allowance amounting to ₱6,500 per annum.
C. Brand new TV, amounting to ₱25,990, as achievement award
given to an employee.
D. Rice subsidy amounting to ₱2,500.
5. Which of the following statement is FALSE?
A. Charges/Miscellaneous can be best interpreted as deductions
made by the employer for some other reasons.
B. Withholding tax is the amount contributed by any wage earner to
the government.
C. Pag-ibig funds provides discounts when it comes to health-related
problems.
D. SSS collects contributions to the private employees to ensure that
they will receive their benefits.
6. Girlie received a Christmas bonus of ₱3,000, uniform allowance
amounting to ₱8,000 and rice subsidy of ₱3,000. How much is the non-
taxable amount?
A. ₱14,000 B. ₱12,000 C. ₱11,000 D. ₱9,000
7. Ms. Rica is a government employee and wanted to monetize her unused
sick and vacation leave. Suppose she has unused leave credits of 22 days
and her daily rate is ₱650, how much will be her additional earnings?
A. ₱15,200 B. ₱14,300 C. ₱12,000 D. ₱10,000
For item 8-10. Mr. Ramos worked in Company A.
8. Suppose he received a Christmas bonus of ₱12,000, how much of the
bonus is taxable?
A. ₱2,200 B. ₱3,800 C. ₱4,500 D. ₱7,000
9. Considering Mr. Ramos’s tax percentage is 20%, how much is her tax
payable for the said bonus?
A. ₱2,100 B. ₱1,400 C. ₱800 D. ₱500
10. How much is his net income form the bonus?
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A. ₱5,600 B. ₱4,400 C. ₱3,200 D. ₱2,500
For items 11-15. Mr. Dela Cruz is working in Company B. He receives the
following benefits form his employer.
Benefits Amount
Medical assistance ₱200/month
Rice subsidy ₱2,500/month
Uniform allowance ₱7,000/year
Laundry ₱400/month
Christmas Bonus ₱10,000
11. How is his total earnings form the benefits in one year?
A. ₱11,100 B. ₱27,900 C. ₱41,000 D. ₱54,200
12. How much is the taxable amount?
A. ₱10,300 B. ₱11,890 C. ₱13,200 D.₱15,100
13. How much is the non-taxable amount?
A. ₱41,000 B. ₱35,500 C. ₱24,000 D. ₱15,200
14. Suppose he has 25% tax percentage; how much is his tax payable?
A. ₱1,000 B. ₱3,200 C. ₱10,250 D. 13,550
15. Based on the previous problem (item 14), how much will be his net
earnings form the benefits?
A. ₱51,000 B. ₱41,000 C. ₱39,900 D. ₱28,000
VII. Reflection
Answer the chart by indicating what you have learned in taxable and non-
taxable benefits.
Benefits
Taxable Non-Taxable
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VIII. References
Dagal, Keneth Adrian P.,Lopez, Brian Roy C.,Martin-Lundag, & Leah
C.(2016a). Business Math Teacher’s Manual. Department of
Education. Quezon City. Vibal Group, Inc.
Dagal, Keneth Adrian P.,Lopez, Brian Roy C.,Martin-Lundag, & Leah
C.(2016b). Business Math Learner’s Material. Department of
Education. Quezon City. Vibal Group, Inc.
Santos, Durwan C. & Sta. Maria, Karl Bryan V. (2015). MATH ACTIVATED:
Engaged Yourself and Our World. Business Math. Salesiana Books
by Don Bosco Press Inc.
Bureau of Internal Revenue. Republic of The Philippines, (March 15,2018).
https://www.bir.gov.ph/index.php/revenue-issuances/revenue-
regulations/2018-revenue-regulations.html
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1. A 6. C 11. D
2. A 7. B 12. C
3. D 8. D 13. A
4. A 9. B 14. B
5. C 10. A 15. A
Assessment
A. 1. FALSE 6. FALSE B. 1. ₱7,800
2. FALSE 7. TRUE 2. ₱9,548.30
3. TRUE 8. FALSE 3. ₱29,860.43
4. FALSE 9. TRUE 4. Answer may vary
5. Tax = ₱4,479.06
5. TRUE 10. FALSE
Net = ₱40,381.37
Activities
IX. Answer Key
X. Development Team
Development Team of the Learning Activity Sheets
Writer: Aurora T. Sarmiento
Editor: Anthony Rayley M. Cabigting, DEM
Reviewer:
Layout Artist:
Management Team: Engr. Edgard C. Domingo, PhD, CESO V
Leandro C. Canlas, PhD, CESE
Elizabeth O. Latorilla, PhD
Sonny N. De Guzman, EdD
Elizabeth C. Miguel, EdD
For inquiries or feedback, please write or call:
Department of Education – Division of Mabalacat
P. Burgos St., Poblacion, Mabalacat City, Pampanga
Telefax: (045) 331-8143
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