-- All in the office since mid-November -- All in the office since mid-November -- All in the office since mid-November
The calculation of the Christmas bonus is a contest of precision on which depend the payment of debts, gifts, monthly payments of items purchased during the Buen Fin and, in some cases, a little savings to be prepared in January and February.
Did you know that only 1% of people know how to calculate their Christmas bonus accurately?
The most surprising thing is that every year this contest could be declared void if it were a prize that was only given to those who knew how to calculate the Christmas bonus with all the decimals, that is to say, we know how to approximate it, but it is not possible to have exact deductions and it is even more complicated if it is deposited in two weeks, week or monthly payment.
In 2018 a study was conducted to check if people could perform their Christmas bonus calculation, and it was obtained that only 1% of the total sample could calculate the exact amounts, the other 99% although they had good approximations highlights that 8% were with margin of error higher than 20%.
Privacy is key, let's not give away our confidential data..
Today we can find multiple bonus calculators on the Internet, some of them very accurate and anonymous; even, and this would be the first recommendation, for no reason should you leave data such as RFC, CURP, mail or full name in a settlement calculator, liquidations or bonuses on the web.
A bit of culture for Christmas talks
We should consider some interesting facts for these times, from the origin and meaning to how it is calculated and what types of taxes or withholdings it has.
Let's start with its origin and application:
By definition of the RAE, it is the Gift that is given at Christmas or on the feast of the Epiphany, and that makes a lot of sense since surely many of us remember that the candy after the posadas is also called aguinaldos.
Regarding etymology, there are at least four proposed definitions, with greater or lesser credibility:
- "Noc in anno", (Latin phrase meaning "in this year").
- "A gui l'an neuf" (which would indicate druidic rituals related to the new year and mistletoe),
- "Eguinando" ("new year's gift" in Celtic language),
- "Aquí danlo" ("si queréis vino o pan / seguid cantando que aquí lo dan" -popular-).
More than 26 countries pay Christmas bonus
Returning to general cultural issues, the Aguinaldo is not a worldwide right of workers as is the rest, there are discretionary Christmas bonuses as in the United States; specifically as Aguinaldo and also recognized by law exists in the following countries in addition to Mexico:
- Argentina, Puerto Rico, Chile, Nicaragua, Colombia, Brazil, Italy, Portugal, Spain, France, Greece, Austria, Belgium, Cyprus, Finland, Sweden, Turkey, Denmark, Germany, Switzerland, India, Indonesia, Philippines, Singapore, Taiwan, China, Malaysia and Hong Kong.
Specifically in Mexico we must consider some key aspects that, although we hear every year, we must have a quick source of information that allows us to identify accurate and relevant information.
The Federal Labor Law and Article 87
In our country, the Christmas bonus consists of at least 15 days of salary and must be paid before December 20. Even though workers have not yet completed one year of work, they are entitled to the proportional part and employers are obligated to pay a Christmas bonus to workers, since this benefit was established in article 87 of the Federal Labor Law.
It is important to consult official sources, although some pages summarize, they may miss updates of the law. Here is a link to the latest version of the Federal Labor Law:
https://www.gob.mx/cms/uploads/attachment/file/156203/1044_Ley_Federal_del_Trabajo.pdf
Article 86.- Equal work, performed in the same position, workday and conditions of efficiency, shall correspond to equal salary.
Article 87.- Workers shall be entitled to an annual bonus which shall be paid before December twentieth, equivalent to at least fifteen days of salary.
Those who have not completed one year of service, regardless of whether or not they are working on the date of payment of the Christmas bonus, shall be entitled to be paid the proportional part of the bonus, according to the time they have worked, regardless of the time they have worked.
Article 88.- The terms for the payment of wages shall never be longer than one week for persons performing material work and fifteen days for other workers.
Article 87 of the Federal Labor Law establishes both the obligation on the part of the employer and the importance of proportionality in the case of not having been with the company for one year. By the way, I was very surprised with Article 88, since I have had more than one job in large companies where I was paid monthly, even though the law does not contemplate it. =(
December 20 is always mentioned as the deadline and penalties are contemplated, but where are they stipulated or how much are they?
It is the Federal Labor Law itself, in Article 1002, which states:
Article 1002. For violations of labor regulations not sanctioned in this Chapter or in any other provision of this Law, the offender shall be fined the equivalent of 50 to 5000 times the general minimum wage.
Then, if we are not paid our Christmas bonus, penalties of 50 to 5,000 times the UMA (Unidad de Medida y Actualización) are contemplated for this type of infraction, whose current value is $89.62 Mexican pesos. That is to say, the fine ranges from $4,481 to $44,810 pesos, which is not very high...
Just so as not to leave acronyms unexplained, UMA is a unit of economic reference and is useful to determine the amount of the payment of obligations and assumptions set forth in federal, state and Mexico City laws, as well as in the legal provisions that emanate from all of the aforementioned.
UMA Means: Unidad de Medida y Actualizacion. It began to be used in 2016, with the objective of replacing the scheme Veces Salario Mínimo (VSM) and currently, it is used to calculate mortgage loans (such as those of Infonavit), to pay fines, taxes, governmental procedures and various social benefits.
Now let's do the exact bonus calculations.
We need to establish an accurate bonus calculation and for this we must prepare:
- Last daily salary received before the Christmas bonus payment, this can be found in the payroll receipt or we can divide the salary concept by the days of the period.
- Days worked in the year, i.e., from the date of entry or January 1 of the year and deducting "absences and disabilities".
Calculating the Christmas bonus is very easy, but...
Calculating the Christmas bonus is relatively easy as we will see in the following examples, the complicated part comes at the moment of applying the taxes, it is worth clarifying that the payment of the Christmas bonus is subject to income tax withholding, since the SAT considers it as income.
Aguinaldo by law, considering 15 days and a gross salary of $14,420, we can make the total formula or simply divide by 2
| MXN $14,420 / 30 = | 480.67 |
| 480.67 x 15 = | |
| $7,210 |
And it is time to understand how ISR applies, i.e., the Christmas bonus is exempt from ISR if it does not exceed the amount equivalent to 30 days of the Unidad de Medida y Actualizacion (UMA), which, as previously mentioned, has a value of $89.62 pesos per day.
In other words, if the monthly income is $5,448.90 or less, which would give a Christmas bonus of $2,724.45 or less, they should not pay taxes on the benefit.
For the calculation of income tax withholding, we have two options provided by the Income Tax Law and both are legal, variable income is not considered in the Christmas bonus.
- Option 1) Article 96 of the Income Tax Law (It is added to the monthly income and withholding ISR considering that the higher the income, the more we will be taxed that month).
- Option 2) Article 174 of the Regulations of the same Law (taking it to monthly income during the year).
Let us begin with the most complex, Article 174.
a) The taxable Christmas bonus is divided by the annual factor of 365 days and the result is multiplied by 30.4, resulting in an average monthly bonus.
b) The employee's ordinary monthly salary is added to the average monthly bonus.
c) The tax will be calculated by applying the procedure established in Article 96 of the Income Tax Law.
d) The tax corresponding to the last regular monthly salary shall also be calculated.
e) The difference between the taxes calculated in accordance with paragraphs c) and d) above is obtained and divided by the average monthly bonus obtained in accordance with paragraph a) to obtain a rate.
f) The taxable Christmas bonus is multiplied by the rate calculated in the preceding paragraph to determine the income tax to be withheld from the employee.
We can conclude that calculating the Christmas bonus is easy, but to arrive at the ISR we require several sources of information.
For this it is necessary to have the ISR tables and understand which option is being used by the company where we work, and it should be noted that the normal calculation with article 96 of the ISR Law is more convenient for low income levels, that is to say, less than $15,000 pesos per month, and the higher the amount of the Christmas bonus, the more convenient it is to use the procedure indicated in article 174 of the Regulations of the Law.
We must consider that there are two ways to apply ISR and both are valid and legal, we must also consider if we had variable income and what is the 30-day period being considered.
In addition to all this, it is critical to have the updated value of the UMA, to know the ISR tables and to apply some divisions and multiplications in Excel.
If we consider all this, it is clear that for 99% of those of us who work in a company, the calculation of the Christmas bonus is reduced to "According to my calculations, I will receive approximately...".
Source of reference
http://etimologias.dechile.net/?aguinaldo
https://noticieros.televisa.com/historia/la-historia-detras-aguinaldo-que-recibes-cada-ano/
https://www.manuelnarvaez.com.mx
[...] with the company, for which reason we will be paid our bi-weekly salary, vacation, Christmas bonus and some other benefits depending on the [...].
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