Question:

I received an honorarium from an external funder through the university. Since it was credited to me through payroll, I assume this amount is included in the computation of my 13th month pay.It was not. Why is this income not included in the 13th month pay?

Answer:

13th month pay is equivalent to 1/12 of the basic salary.Honorarium received for extra work is not part of the basic salary.

The Supplementary Implementing Rules of PD 851 provides that remuneration which is NOT part of the basic salary shall NOT be included in the computation of the 13th month pay.

However, all income earned unless specifically exempted by law, are taxable. Thus, the honorarium is subject to withholding tax. As the Withholding Tax Agent for the regular employee as well as the subcontractor for a project, Xavier Ateneo consolidates reporting of income and taxes paid for the same by processing payments through its payroll system.