Guide on Performance-Based Christmas Bonus Tax Rules
PERFORMANCE-BASED CHRISTMAS BONUS – Here is a guide on when is this type of Christmas bonus subject for tax deduction.
Every December, a lot of people await the Christmas bonus. It is different from the 13th month pay that employees are entitled to under the law in the Philippines.
The Christmas bonus is upon the discretion of the employer or the company. It is like a cash gift that signifies appreciation and gratitude to the employees for the services they have rendered to the company.
The Christmas bonus is undeniably a huge help to every employee most especially that there are a lot of expenses during the holiday season. It is also an opportunity to bridge the personal expenses and debts to be paid.
With regards to the Christmas bonus, it might be based on performance or not. Also, it can be both as the employer has the full discretion on giving cash incentives to his or her employees during the holiday season.
Is the Performance-Based Christmas Bonus taxable? Yes, it is subject for tax deduction if it surpasses the Php 10,000.00 limit set based on an article on Asean Briefing. In case it exceeds the said amount, it will automatically be counted as “other benefits” or the non-performance-based bonus.
The Non-Performance-Based bonus is also subject for tax deduction if it exceeds so Php 90,000.00 based on the article. So if your Performance-Based Christmas Bonus is Php 15,000.00 while your “Other Benefits” is Php 30,000.00, it is not subject to tax deduction since the total which is Php 45,000.00 does not exceed the exemption cap.
Other Examples:
- Performance-Based Bonus = Php 13,000.00
Other Benefits = Php 14,000.00
Total = Php 27,000.00 – not subject for tax deduction
- Performance-Based Bonus = Php 20,000.00
Other Benefits = Php 100,000.00
Total = Php 120,000.00 (the excess of Php 30,000.00 is subject for tax deduction)
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READ ALSO: 13th Month Pay – Is It Subject For Tax Deduction in the Philippines?
