What Is the Difference Between Non-Tax Exemption Ceiling & Deminimis Exemption Ceiling? – Sprout Solutions

In this article, you'll be able to understand more about the difference between Non-Tax Exemption Ceiling & Deminimis Exemption Ceiling.

First, this information is located under Setup > Company > Profile > Tax Computation.

1. Non-Tax Exemption Ceiling - the 90,000 is mandated by law and refers to the 13th-month, bonus, and other earnings.

2. Deminimis Exemption Ceiling - the 85,000 (system default) refers to the default amount for the ceiling of non-taxable deminimis of the company.

List of Deminimis Benefits:

Monetized unused vacation leave credits to employees not exceeding ten (10) days during the year;
Monetized value of vacation and sick leave credits paid to government officials and employees;
Medical cash allowance to dependents of employees, not exceeding P1,500 per employee per semester or P250 per month;
Rice subsidy of P2,000 or one sack of 50kg rice per month amounting to not more than P2,000;
Uniform and clothing allowance not exceeding P6,000 per annum;
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 P10,000.00 per annum;
Laundry allowance not exceeding P300 per month;
Employees achievement awards, e.g. for the length of service or safety achievement, which in the form of tangible personal property other than cash or gift certificate, with an annual monetary value not exceeding P10,000 received by the employee under an established written plan which does not discriminate in favor of highly paid employees;
Gifts given during Christmas and major anniversary celebrations not exceeding P5,000 per employee per annum;
Daily meal allowance for overtime work not exceeding twenty-five percent (25%) of the basic minimum wage;
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 ten thousand pesos (Php 10,000.00)per employee per taxable year;

Things to note:

a) The 90,000 is not adjustable and;

b) while the 85,000 can be changed, please ensure that it is aligned to the deminimis of your employees.

c) It has an effect on the annual income tax computation. All amounts in excess of the set ceiling will already be subject to tax based on the employee's taxable income.

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