Tuesday, May 13, 2008 Tax notes: Higher exemption for rice allowance
EFFECTIVE May 10, 2008, employees receiving the following benefits from their employers shall enjoy higher tax exemption thresholds pursuant to Revenue Regulations (RR) 5-2008:
1. Rice allowance—from the current P1,000 per month to P1,500; and
2. Uniform and clothing allowance—from the current P3,000 per year to P4,000.
These allowances are classified as “de minimis” benefits and are exempt from the tax on compensation when given to rank and file employees and from the fringe benefits tax (FBT) when given to managerial and supervisory employees.
"De minimis” benefits are facilities and privileges of relatively small value which are given by employers as a means of promoting the health, goodwill, contentment, or efficiency of their employees. (Source: Punongbayan & Araullo)
