How to Compute Tax on Salary | PAANO MAG COMPUTE NG TAX SA SWELDO

Gerard Carpizo

21 Dec 202205:34

Summary

TLDRThis video script discusses the intricacies of withholding taxes on various forms of employee compensation, including overtime pay, hazard pay, and profit sharing. It provides a detailed explanation of the tax implications for employees in Hong Kong from 2023 onwards, using a case study to illustrate how withholding tax is calculated. The video also touches on the statutory minimum wage and offers a comparison of the tax rates for 2022 and 2023, emphasizing the importance of understanding tax obligations for both employers and employees.

Takeaways

📅 The video discusses changes in withholding tax regulations for 2023 and onwards, indicating a shift from previous years.
💼 It covers various forms of employee compensation, including overtime pay, director's fees, profit sharing, and hazard pay, which are subject to withholding tax.
🌟 The video highlights the importance of understanding how to calculate withholding tax on supplementary compensation.
💰 It provides a specific example of how withholding tax is calculated for an employee earning 27,000, illustrating the process for both 2022 and 2023.
📊 A comparison is made between the withholding tax rates for 2022 and 2023, showing a decrease from 15% to 13.35% for certain income brackets.
📈 The script mentions a new withholding tax table effective from January 2018 to December 2022, and an updated one for 2023 onwards.
💡 The video emphasizes the need for accurate computation of withholding tax to ensure compliance with tax regulations.
📋 It mentions the use of a certificate of compensation payment or Form 2316 for recording tax withheld.
🚫 The script clarifies that certain benefits, like hazard pay, are taxable and subject to withholding tax.
🎉 The video encourages viewers to engage with the content by liking, sharing, and subscribing for more informative videos.

Q & A

What is the topic of the video called 'The discus'?
-The video discusses withholding tax on compensation, covering various forms of employee remuneration such as overtime pay, director's fees, profit sharing, and other benefits.
What types of employee benefits are mentioned in the video as being subject to withholding tax?
-The video mentions benefits such as hazard pay, 13-month pay, and other remunerations received from an employer-employee relationship as being subject to withholding tax.
What is the significance of the term 'withholding tax on compensation'?
-Withholding tax on compensation refers to the tax that is deducted from an employee's salary or wages by the employer and remitted to the tax authorities on behalf of the employee.
What is the difference between the withholding tax treatment for 2022 and 2023 as per the video?
-The video highlights a change in the withholding tax computation for the years 2022 and 2023, with specific rates and computations detailed for each year.
What is the statutory minimum wage mentioned in the video, and how does it relate to withholding tax?
-The statutory minimum wage is a legal minimum amount that employees must be paid per hour, and it is a factor in calculating withholding tax, especially for minimum wage earners.
How does the video explain the withholding tax computation for someone earning a basic pay of 27,000?
-The video provides an example of how to compute the withholding tax for an individual with a basic pay of 27,000, detailing the steps and resulting tax amount.
What is the purpose of Form 2316 mentioned in the video?
-Form 2316, or the Certificate of Compensation Payment on Tax Withheld, is used to report the amount of tax withheld from an employee's compensation.
What is the relevance of the terms 'not taxable era' and 'downtown' in the context of the video?
-The terms 'not taxable era' and 'downtown' are used to explain specific periods or areas where certain types of income might be exempt from tax or where tax regulations might differ.
How does the video encourage viewers to engage with the content?
-The video encourages viewers to give a thumbs up, share the video, subscribe, and enable notifications to support the creation of more informative videos.
What is the role of the speaker, Kirari, in the video?
-Kirari is the presenter of the video, providing information and guidance on withholding tax and its implications for employees and employers.

Outlines

00:00

💼 Withholding Tax on Employee Compensation

The video script discusses the concept of withholding tax on compensation, focusing on various forms of employee remuneration such as overtime pay, fees, profit sharing, and vacation leave. It highlights the taxable nature of these benefits in the context of an employer-employee relationship. The script provides an example of how withholding tax is calculated, using a hypothetical scenario where an employee earns a basic pay plus allowance, and the tax is computed based on a specific formula. It also mentions the statutory minimum wage and the withholding tax table effective from January 2018 to December 2022, with a specific example for the year 2023. The video aims to educate viewers on the tax implications of different types of compensation and how to calculate the withholding tax accordingly.

05:02

📢 Engaging with the Audience

In the second paragraph, the speaker encourages viewers to engage with the video by giving it a thumbs up and subscribing to the channel. They also prompt viewers to activate notifications to stay updated with new content. The speaker, Kirari, expresses gratitude for the viewers' support and hints at the creation of more informative videos in the future. The paragraph ends with a musical note, suggesting a positive and engaging tone throughout the video.

Mindmap

Keywords

💡Withholding Tax

Withholding tax is a tax that is deducted from an employee's income by the employer. It is a form of tax that is collected at the source of the income, which in this case is the employee's salary. In the video, the script discusses how withholding tax applies to various forms of compensation, including overtime pay, director's fees, and hazard pay. The script provides an example of how withholding tax is calculated for a basic pay and allowance of 27,000, illustrating the practical application of the concept.

💡Supplementary Compensation

Supplementary compensation refers to additional benefits or payments made to employees beyond their regular salary. This can include bonuses, profit sharing, or other non-wage benefits. The video script mentions supplementary compensation in the context of withholding taxes, indicating that these additional payments are also subject to tax withholding, which is an important consideration for both employers and employees.

💡Profit Sharing

Profit sharing is a form of compensation where employees receive a portion of the company's profits. This is often seen as a way to incentivize employees and align their interests with the success of the company. In the script, profit sharing is listed as one of the benefits that may be subject to withholding tax, highlighting the financial implications for employees receiving such benefits.

💡Overtime Pay

Overtime pay is additional compensation given to employees for working hours that exceed the standard or regular working hours. It is typically calculated at a higher rate than the regular hourly wage. The video script discusses overtime pay in relation to withholding tax, emphasizing that this form of pay is also taxable and must be accounted for in tax calculations.

💡Director's Fees

Director's fees are payments made to members of a company's board of directors for their services. These fees are separate from any salary they might receive if they also hold an executive position within the company. The script mentions director's fees as an example of compensation that is subject to withholding tax, indicating that all forms of income, including those for board service, are considered for tax purposes.

💡Hazard Pay

Hazard pay is additional compensation provided to employees who work in hazardous conditions or environments that pose a risk to their health or safety. The video script includes hazard pay in its discussion of various forms of compensation subject to withholding tax, illustrating the broad scope of income that is taxable.

💡13th Month Pay

13th month pay, also known as a year-end bonus, is an additional month's salary given to employees as a reward for their service over the year. It is often seen in cultures where it is customary to provide this bonus. The script mentions 13th month pay as another form of compensation that is subject to withholding tax, showing that even discretionary bonuses are considered part of an employee's taxable income.

💡Taxable Benefits

Taxable benefits refer to non-cash forms of compensation that are subject to tax. These can include items like company cars, health insurance, or other perks that have a monetary value. The video script discusses taxable benefits in the context of withholding tax, emphasizing that these benefits are not exempt from taxation and must be factored into an employee's total taxable income.

💡Withholding Tax Table

A withholding tax table is a guide used by employers to calculate the amount of tax to be withheld from an employee's income. It outlines the tax rates and brackets based on income levels. The script refers to a withholding tax table for Hong Kong, indicating that different regions may have their own tax tables, which are used to determine the correct amount of tax to withhold.

💡Certificate of Compensation Payment

A certificate of compensation payment is a document that records the total compensation paid to an employee and the amount of tax withheld. It serves as an official record for both the employer and the employee. The script mentions the certificate of compensation payment in the context of Form 2316, which is a form used for reporting this information to the tax authorities.

💡Statutory Minimum Wage

The statutory minimum wage is the lowest wage that employers can legally pay their employees. It is set by the government and is intended to ensure that workers earn a fair wage for their labor. The video script references the statutory minimum wage in the context of withholding tax, indicating that even workers earning at or near the minimum wage are subject to tax considerations.

Highlights

Discussion on withholding tax on compensation for 2023 and onwards.

Mention of 'The discus' video, which seems to be the title of the content.

Inclusion of director's fees, profit sharing, and monetized vacation leave in withholding tax considerations.

Explanation of how to treat supplementary compensation for withholding taxes.

Details on statutory minimum wage and overtime pay, including night shift differentials.

Reference to a video on minimum wage earners and withholding tax table from 2018.

Update on withholding tax rates for 2023 compared to 2022.

Example calculation of withholding tax for an individual earning 27,000 with a 15% rate.

Introduction of a new method for withholding tax computation for 2023.

Difference in withholding tax computation between 2022 and 2023 illustrated with an example.

Requirement for a certificate of compensation payment on tax withheld or BIR Form 2316.

Clarification on which benefits are taxable and which are not.

Timing for withholding taxes, usually applicable in November and December.

Call to action for viewers to give the video a thumbs up and share it with others.

Encouragement for viewers to subscribe and enable notifications for more content like this.

Closing remarks by the presenter, Kirari, indicating more videos to come.