Pay items are everything you pay besides basic salary: allowances, bonuses, commissions, de minimis benefits and more. This guide shows how to set up your company's pay items, how each kind is taxed, and how to give one to an employee.
Before you start
- Owner / Management users and payroll officers can add pay items and give them to employees.
- Set up the item once in Company setup. The amount for each employee is set on the employee's page.
Add a pay item
- Open Company setup and choose Allowances and benefits.
- In the form under the list, type a Code (for example SHIFT) and a Name (for example Shift allowance).
- Choose the Type. See the table below.
- For a De minimis item, choose which De minimis limit applies.
- Check the switches:
- The benefits ceiling switch: on, the item is tax-free until the year's 13th month pay and other benefits pass ₱90,000. It isn't shown for hazard pay and non-taxable items.
- Part of the basic salary for 13th month pay, if your company treats the item as part of the wage.
- Counts toward contributions: SSS, PhilHealth and Pag-IBIG. Each starts with the usual choice for the type; the note under the boxes explains when to change it.
- Click Add pay item. You see "Added" with the item's name.
How each type is taxed
| Type | Tax treatment in Sahora |
|---|---|
| Allowance | Taxed like salary (fixed meal, transportation, communication allowances, COLA) |
| Bonus, Commission, Other benefit (e.g. honorarium) | Tax-free until the year's 13th month pay and other benefits pass ₱90,000; only the part above is taxed |
| De minimis | Tax-free up to its BIR limit; the excess counts toward ₱90,000 |
| Hazard pay (tax-free for minimum wage earners) | Taxed like an allowance for everyone else |
| Non-taxable (exempt by law) | Tax-free |
The de minimis limits come from Sahora's tables and are shown beside each item. Changes are listed on Statutory updates.
Change an existing item
On each item's line in the list:
- Tick or untick SSS, PhilHealth or Pag-IBIG. The change is saved at once. A de minimis item has only the Pag-IBIG box, which applies within its limit.
- Click Make fully taxable to take an item out of the benefits ceiling, or Count toward ₱90,000 to put it back.
- Click Deactivate to stop using an item. Reactivate brings it back.
Give an item to an employee
- Open the employee's page and find Allowances, benefits and bonuses.
- Choose the Allowance, benefit or bonus and type the Amount (₱).
- Choose How often:
- Per month, split across pays
- Per month, all on the 1st cut-off
- Per month, all on the last cut-off (2nd for semi-monthly)
- Every pay
- Per day worked
- One time (e.g. bonus)
- Choose the From date (or the Date for a one-time item) and, if it ends, the Until (optional) date.
- Click Add or change amount (or Add for a one-time item).
A one-time item is paid in the pay period that includes its date. To change an amount from a future date, add the same item with the new amount and date: the current amount ends the day before.
To stop an item, click End and choose the end date. Remove is only for correcting a mistake.
Related settings
In Company setup → Payroll settings:
- Pag-IBIG on de minimis above its limit decides whether the excess over a de minimis limit counts toward Pag-IBIG.
- 13th month pay basis adds other pay to the 13th month basis. By law only basic pay counts. See 13th month pay.
What can go wrong
- "That code is already used." Choose another code.
- "Code: 2–20 letters, numbers or _." Use only letters, numbers and underscores.
- "Choose which de minimis limit applies." A de minimis item needs its limit.
- "De minimis benefits within their limit are not compensation for SSS or PhilHealth." Only the Pag-IBIG box can be changed on a de minimis item.
Good to know
- Allowances can also be given when you add an employee, or in the employee import (see Importing your data).