A new feature has been added to the 13th Month Pay calculation that allows for tax processing based on the following condition:

  • If an employee receives more than 90,000, only the amount exceeding 90,000 will be subject to tax.


To implement this, a dropdown option has been added to the Calculate WTAX section, which is activated once the Calculate WTAX checkbox is ticked.


Steps to Enable the New Tax Calculation Feature for 13th Month Pay

1. Access Timekeeping Posting Settings

  • Click the profile icon in the upper-right corner of the page
  • Go to Administration > Timekeeping Posting.

  • Select the 13th Month Module.

2. Add a New Entry

  • Click the Add button to create a new entry.

3. Enter the Necessary Details

  • Company: Select the company name.
  • Year: Specify the applicable year.
  • Cut-Off: Set the cut-off for the period that the 13th-month pay covers (e.g., monthly, semi-monthly). 
  • Cut-Off Range: Define the cut-off range (e.g., 2025-JAN-SEMI-1, 2025-JAN-SEMI-2 etc.) for the 13th-month pay calculation. 

4. Enable the Calculate WTAX Option

  • Tick the checkbox labeled Calculate WTAX.
  • Once the checkbox is selected, the WTAX Type dropdown will appear with the following options:
    • 13th Month Pay
    • Excess to 90k

5. Select the Desired WTAX Type

  • Choose 13th Month Pay if the entire amount should be taxed.
  • Choose Excess to 90k if only the amount exceeding 90,000 should be taxed.

6. Process the 13th Month Pay

  • Once all the required details are entered, click Process.
  • The system will calculate the 13th-month pay based on the selected WTAX type.

7. Verify the 13th Month Pay Calculation

  • After processing, verify the 13th-month pay in the employee’s payroll report to ensure the tax has been applied correctly based on your selection.


Important Notes

  • This feature ensures that only the amount exceeding 90,000 is subject to tax when selecting Excess to 90k.
  • Double-check the cut-off and cut-off range to ensure they align with the payroll period you want to process. 
  • This update allows greater flexibility in calculating taxes on 13th-month pay for employees with earnings over 90,000.