ANTE User ManualAnnualization Settings
Annualization is the year-end reconciliation of income tax. Through the year, payroll withholds tax on each cutoff's pay using the periodic withholding tables. At the end of the year the law (BIR RR 11-2018) requires the employer to compare what was withheld with the tax actually due on the whole year's income, and to refund or collect the difference. This page explains the one screen and the one setting behind that process.
You reach the screen at Manpower → Payroll Setup → Annualization. It is a read-only view of the annual income tax table that the year-end computation uses. You do not edit anything there. The switches that turn the true-up on and decide when it happens live in HR Settings.
The Annual Income Tax Table
The screen shows the table titled Annual Income Tax Table for the effective date you pick. A date selector (Effective Date) at the top lists the dates the system ships; the most recent one is selected when the page opens. A notice reads: "This table is read-only. BIR table updates ship as code releases." If a date has no table, the page says "No annualization table available for the selected date."
Annual tax is the row's base tax plus the rate applied to the income above the row's minimum. In the current tables, income up to ₱250,000 is untaxed; from ₱250,000 to ₱400,000 the rate is 15%; from ₱400,000 to ₱800,000 it is ₱22,500 plus 20%; from ₱800,000 to ₱2,000,000 it is ₱102,500 plus 25%; from ₱2,000,000 to ₱8,000,000 it is ₱402,500 plus 30%; above ₱8,000,000 it is ₱2,202,500 plus 35%. Earlier dates in the selector (for example 2018) show the older rates, and payroll always uses the table in force on the date being computed.
Tax rates are set by law, not by your company. When the BIR changes them, the table is updated in a software release, so every company moves on the same date with no data entry.
The Year-End True-Up Setting
The true-up itself is a switch in HR Settings → Payroll, titled Year-End Tax Annualization (True-Up). It is on by default.
- Open HR Settings
Go to Manpower → HR Setup → Settings and find the Payroll group.
- Set the switch and start month
Turn Year-End Tax Annualization (True-Up) on, then leave December only or pick an earlier start month. A confirmation message says "Year-end true-up settings updated".
What the True-Up Does Each Cutoff
When a qualifying cutoff is computed, payroll works out, for each employee:
- The annual tax due: the year's taxable income so far (including this cutoff and the portion of 13th month and other benefits above the tax-free ceiling) run through the annual table above.
- The tax already withheld this year on posted cutoffs, plus any tax a previous employer withheld that year (credited against the annual due).
- The difference, folded straight into that cutoff's Tax figure. A shortfall is withheld; an over-withholding is refunded on the payslip.
| Annual taxable income | ₱600,000.00 | |
|---|---|---|
| Base tax of the ₱400,000–₱800,000 row | ₱22,500.00 | |
| Excess over ₱400,000, at 20%₱200,000 × 20% | + | ₱40,000.00 |
| Annual tax due | = | ₱62,500.00 |
| Tax withheld so far (example) | − | ₱55,000.00 |
| Withheld on the final payroll runA negative figure would be a refund | = | ₱7,500.00 |
The engine applies several safeguards:
- Refunds are capped. A refund is never larger than the tax actually withheld this year, and never more than the employee can actually receive in that payslip.
- Shortfalls are capped. A collection never takes net pay below zero; any uncollectible remainder is recorded on the payslip's basis as a cap shortfall (the law makes the employer liable for it).
- Separated or inactive employees are skipped. Their annualization is settled through the final-pay process instead.
- Fixed withholding and dispatch. A fixed-withholding plan that is set to skip the true-up, or a dispatch treatment that skips it, keeps the true-up off for that year. A fixed withholding plan that does not skip it simply counts the fixed amounts as tax already paid.
- Minimum-wage earners. Once an employee is declared a minimum wage earner, a mid-year catch-up can refund tax that should not have been withheld, even before the start month.
- Recompute is safe. The figures use posted payroll plus the current cutoff, so recomputing a cutoff gives the same answer rather than adjusting twice.
Until an employee's actual 13th month is released, the true-up uses an estimate, and Payroll Summary labels the affected amounts as projected. Release 13th month before the final payroll run so the true-up works on real figures.
Where to See the Result
- Payroll Summary shows a "Year-end tax annualization applied" banner, and the Annual Tax Due and Tax Adjustment columns, on cutoffs where the true-up ran.
- The Annualization Report lists, per employee and year, gross income, non-taxable income, deductions, employee government contributions, taxable income, annualized tax, tax withheld and the settlement (refund or payable). While the year is still in progress its figures are projections.
- The same year totals feed the Alphalist and each employee's BIR 2316. The true-up is built to settle exactly what those reports show, so after the final cutoff posts, the amount still due or refundable is about zero.
| I want to… | Do this |
|---|---|
| Check the brackets used for the year | Open this screen and pick the Effective Date |
| Turn annualization off or spread it over several months | HR Settings → Payroll → Year-End Tax Annualization (True-Up) |
| See each employee's refund or payable | Open the Annualization Report |
How It Connects
Set up first
- HR Settings — holds the switch that enables the true-up and the month it starts.
- Statutory Tables — the Tax Table is the periodic withholding the true-up reconciles against.
Gets its data from
- Payroll Summary — the posted cutoffs supply the income, contributions and tax withheld for the year.
- 13th Month Pay — released 13th month replaces the estimate in the annual taxable income.
Feeds into
- Payroll Summary — shows the tax adjustment folded into the final cutoff.
- HR and Payroll Reports — the Annualization Report shows each employee's refund or payable.
- Alphalist Report — reports the year's totals to the BIR using the same arithmetic.
- BIR 2316 — gives each employee the certificate of the year's compensation and tax.