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MAPUA INSTITUTE OF TECHNOLOGY

INTEGRATED TAX REVIEW COURSE


Fringe Benefit Tax
De Minimis Benefits
DEFINITION
Fringe Benefit Tax (FBT) is a monetary burden imposed by the sovereignty on any good,
service, or other benefit furnished or granted by an employer, in cash or in kind, in addition to basic
salaries, to an individual employee, other than a rank and file employee.
The FBT is a final withholding tax on the grossedup monetary value of the fringe benefit
granted by the employer to an employee who holds a managerial or supervisory position. This is tax
is effective regardless of whether the employer is an individual, professional partnership or a
corporation (regardless of whether the corporation is taxable or not).
Scope of FBT
The FBT Tax !egulations cover only those fringe benefits given or furnished to managerial
or supervisory employee. The !egulations do not cover those benefits which are part of
compensation income, because these are sub"ect to withholding tax on compensation in accordance
with !! #o.$%&.
Fringe Benefit
'ny goods, service or other benefit furnished or granted by an employer in cash or in kind, in
addition to basic salaries to individual employee except rank and file employee.
Items of fringe benefits subject to final tax:
() )ousing
$) *xpense account
+) ,ehicle of any kind
-) )ousehold personnel, such as maid, driver and others
.) /nterest on loan at less than market rate to the extent of the difference between
the market rate and actual rate granted
0) 1embership fees, dues and other expenses borne by the employer for the
employee in social and athletic clubs and similar organi2ations
3) *xpenses for foreign travel
&) )oliday and vacation expenses
%) *ducational assistance to the employee or his dependents
(4) 5ife or health insurance and other nonlife insurance premiums or similar
amounts in excess of what the law allows.
I. IMPOSITION OF FRINGE BENEFIT TAX
BASIC RULES:
Benefit/Type of Employee Rule
1. FB given to a rank and file employee #6T sub"ect to F.B. Tax
2. FB given to a supervisor or !"n"geri"# e!p#oee 78B9*:T to F.B. Tax
Exception:
a) F.B. which are authori2ed and exempted from income
tax under any special law;
b) :ontributions of the employer for the benefit of the
employee to retirement, insurance and hospitali2ation
benefit plans;
c) /f the grant of fringe benefits to the employee is
re<uired by the nature of, or necessary to the trade,
business or profession of the employer; or
d) /f the grant of benefits is for the convenience or
advantage of the employer.
$. De Mini!is benefit given to a rank and file employee or
to a managerial or supervisory employee
#6T sub"ect to F.B. Tax
*.=. T'B'> ? 1
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e !inimis Benefits
=e minimis benefits are Facilities or privileges furnished or offered by an
employer to his employees that are of relatively small value and are offered
or furnished by the employer merely as a means of promoting the health,
goodwill, contentment, or efficiency of his employees.

T%e fo##o&ing s%"## 'e (onsi)ere) *DE MINIMIS+ 'enefits NOT S,B-E.T
TO IN.OME TAX /"s &e## "s &it%%o#)ing t"01 of BOT2 !"n"geri"# "n)
r"n3 "n) fi#e e!p#oees.
a) 1oneti2ed unused vacation leave credits of employees not exceeding *14
)"s+ during the year and the monetized value of leave credits paid to
government officials and employees.
b) 1edical cash allowance to dependents of employees not exceeding P 564
per se!ester or P126 " !ont%.
c) !ice subsidy of not more than P17644 per !ont% or ( sack (.4kg.) rice per
month.
d) 8niforms given to employees by the employer not exceeding P67444
per annum (!! &$4($ effective 9anuary (, $4($).
e) 'ctual 1edical benefits given to employees by the employer not
exceeding P147444 per annum.
f) 5aundry allowance not exceeding "#$$ per mont% ;
g) *mployees achievement awards (e.g. for length of service or safety
achievement, which must be in the form of a tangible personal
property other than cash or gift certificate with and annual monetary
value not e0(ee)ing P147444 under an established written plan
which does not discriminate in favor of highly paid employees);
h) >ifts given during :hristmas and ma"or anniversary celebrations not
exceeding P67444 per employee per annum. (deleted: amounts
provided to guests).
i) =aily meal allowance for overtime work not e0(ee)ing 268 of the
basic minimum wage.
The amount of de minimis benefits conforming to the ceiling herein shall
not be considered in determining the !",""" ceiling of other benefits
e#cluded from the gross income under $ection !%&'&('&e' of the )ode*
+llowances which are fixed in amounts and are regularly received by the
employee as part of his monthly compensation income s%all not be
treate& as taxable fringe benefit but as compensation income*
The !inimum 'age Earner receiving ,other benefits- e#ceeding the
!",""" limit shall be ta#able on the ,e#cess benefit-, as well as on his
salaries, wages and allowances, .ust like an employee receiving
compensation income beyond the $tatutory /inimum 0age*
!inimum 'age Earner receiving ,other income-, such as income from
the conduct of trade, business, or practice of profession, e#cept income
sub.ect to final ta#, in addition to compensation income, are not exempt
from income tax on the entire income earned during the ta#able year*
(ATURE of F)B) Tax: Fringe benefit tax is a FI(ALTA*)
a. /t is imposed on the grosse)9up !onet"r v"#ue of fringe benefits furnished, granted
or, paid by employer to employees except rank and file employees.
b. /t is imposed whether the employer is
(. an individual
$. professional partnership or
+. corporation; regardless of whether the corporation is taxable or not, or
-. the government or its instrumentalities.
c. Fringe benefits shall be tre"te) "s " fin"# t"0 on t%e e!p#oee, which shall be
withheld and paid by the employer on or before the (4
th
day of the month following
the calendar <uarter in which the fringe benefit was granted.
*.=. T'B'> ? 2
21-19
II. .OMP,TATION OF MONETAR: ;A<,E OF BENEFIT
TA* BASE A( TA* RATE:
Grosse) up !onet"r v"#ue of fringe 'enefits.
1onetary value of fringe benefit @xxx
=ivided by (effective (($444) 0&A
Grosse)9up !onet"r v"#ue P000
0 T"0 R"te $28
F.B. Tax @xxx
1. 2O,SING PRI;I<EGE
Mont%# Monet"r ;"#ue
a. *mployer #e"ses a residential property 1onthly rental paid x .4A
b. *mployer o&ns a residential property T%e %ig%er bet+een:
F1, in the !eal property declaration
OR
the 2onal value of :/!.
0 .A
0 .4A
)ivi)e 'B ($ months
c. *mployer pur(%"ses residential property in
installment for use employee
'c<uisition cost, exclusive of interest
0 .A
0 .4A
)ivi)e 'B ($ months
d. *mployer pur(%"ses residential property and
tr"nsfers o&ners%ip to e!p#oee
*mployer pur(%"ses residential property and
tr"nsfers o&ners%ip to e!p#oee on " #esser
"!ount
'c<uisition cost or
F1, whichever is higher.
'c<uisition cost or
F1, whichever is higher cost to
the employee
e. )ousing unit inside or ad"acent (within .4 meters)
from the perimeter of the business premises
#6T a T'C'B5* fringe benefit
f. Te!por"r %ousing for a stay in the housing unit
for three (+) months or less
#6T a T'C'B5* fringe benefit
g. )ousing privilege of military officials of the 'rmed
Forces of the @hilippines
#6T a T'C'B5* fringe benefit
2. MOTOR ;E2I.<E
Monet"r ;"#ue
a. *mployer purchases vehicle in t%e n"!e of
e!p#oee.
'c<uisition cost
b. *mployer provides employee with cash for the
purchase of the vehicle, and ownership is placed
in the name of the employee.
:ash received
c. *mployer purchases the vehicle on inst"##!ent
and ownership is placed in the name of the
employee.
'c<uisition cost exclusive of interest
)ivi)e) ' 6 years
*.=. T'B'> ? $
21-19
d. *mployer shoulders a portion of the amount of the
purchase price of vehicle and ownership is placed
in the name of the employee.
'mount shouldered by employer
e. *mployer owns a fleet of motor vehicles for use of
the business and employees.
'c<uisition cost of all vehicles not
used, for sales, freight, delivery
service and other nonpersonal use
)ivi)e) by 6 years; and
!u#tip#ie) by 648
f. *mployer leases and maintains a fleet of motor
vehicles for use of business and employees
!ental payments for motor vehicles
not normally used for sales, freight,
delivery, service and other non
personal use
!u#tip#ie) ' 648
$. OT2ER FRINGE BENEFITS
,) Expenses accounts
". Taxable as fringe benefits
(a. *xpenses incurred by employees but paid by employer
$a. *xpenses by employees reimbursed by employer
+a. @ersonal expenses of the employee (e.g. groceries) paid for or reimbursed by
employer.
Notes=
Ite!s 1" "n) 2" "re not t"0"'#e "s fringe 'enefits when receipted in the name of
the employer and do not partake the nature of the personal expense attributable to
employee.
/tem $" is taxable as fringe benefit whether or not receipted in the name of the
employer.
'. #ot treated as taxable fringe benefits but taxable as compensation income under
7ec. $-.
!epresentation and transportation allowance given regularly on a monthly
basis.

-) E&ucational assistance to emplo.ee or %is &epen&ents)
a. :ost of educational assistance is treated as taxable fringe benefit.
b. :ost of educational assistance is not treated as taxable fringe benefit;
Dhen the study is directly connected with the employerEs trade, business or
profession and
There is a written contract between the employee and employer that the former is
under obligation to remain in the employ of the employer for a period of time.
Dhen given to employeeEs dependents through a competitive scheme under
scholarship program of the company.
#) Interest on loan at less t%an mar/et 0alue
a. The benchmark is ($A until revised. The taxable fringe benefit is (a) /nterest foregone
by the employer or (b) the difference of the interest assumed by the employee and the
rate of ($A.
1) Expenses for foreign tra0el of emplo.ee pai& for b. emplo.er)
a. *xpenses in connection with attending business meeting or convention (except
lodging cost in a hotel) at an average of F+44 per day are considered reasonable
expenses and shall not be sub"ect to fringe benefit tax.
b. The cost of economy and business class airplane ticket shall not be sub"ect to
fringe benefit tax. )owever, +4A of the cost of first class airplane ticket shall be
sub"ect to fringe benefit tax.
c. /n the absence of documentary evidence showing that the employeeEs travel
abroad was in connection with business meeting or convention, the entire cost of
ticket, including cost of hotel accommodations and other expenses shouldered by
employer shall be treated as taxable fringe benefits.
*.=. T'B'> ? >
21-19
d. Traveling expense of family members of employees paid for by employer shall be
treated as taxable fringe benefit.
III. DED,.TION FOR T2E EMP<O:ER
/f the fringe benefit is given to a rank and file employee, or to a supervisory or managerial
employee, but is not subject to fringe benefit tax , the deduction for the employer is t%e
monetar. 0alue of t%e fringe benefit)
/f the fringe benefit is given to a supervisory or managerial employee and is subject to
fringe benefit tax, the &e&uction is t%e grosse&2up monetar. 0alue of the fringe benefit
which compose of the fringe benefit expense and the fringe benefit tax.
QUIZZER
Prin(ip#es
(. Dhich of the following statements regarding Fringe Benefit isGare correctH
/. The fringe benefit tax is a final withholding tax on the grossedup monetary value
of the fringe benefit granted by the employer to an employee who holds a
managerial or supervisory position.
//. Fringe benefit tax is effective regardless of whether the employer is an individual,
professional partnership or a corporation (regardless of whether the corporation
is taxable or not).
///. The fringe benefit tax regulations cover only those fringe benefits given or
furnished to managerial or supervisory employee. The regulations do not cover
those benefits which are part of compensation income, because these are
sub"ect to creditable withholding tax on compensation.
a. / only c. /, // and ///
b. / and // only d. #one of the above
$. 'n employer sub"ect to fringe benefit tax may be aGan
a. /ndividual c. :orporation
b. >eneral professional partnership d. 'll of the above
+. Dhich of the following statements is correctH
$tatement 1: The fringe benefit tax is part of the compensation of the managerial employee.
$tatement %B The fringe benefit tax is to be withheld and remitted by the employer to the B/!.
a. 7tatement ( only c. 7tatements ( and $
b. 7tatement $ only d. #either statement ( nor statement $
-. Dhich of the following is not correctH
a. Fringe benefit tax is an income tax
b. Fringe benefit tax rate is +$A
c. Fringe benefit of a managerial employee is sub"ect to final income tax
d. Fringe benefit tax is a creditable withholding tax
*.=. T'B'> ? 6
21-19
.. Dhich of the following is sub"ect to fringe benefit taxH
a. :ompensation of the rank and file employee.
b. :ompensation of the supervisory or managerial employee.
c. Fringe benefit of the rank and file employee.
d. Fringe benefit of the supervisory or managerial employee.
0. $tatement 1B ' fringe benefit which is su'?e(t to the fringe benefit tax is taxable income of the
employee.
$tatement %B ' fringe benefit which is not su'?e(t to the FBT is taxable income of the employee
a. 7tatements ( I $ are false
b. 7tatement ( is true but statement $ is false
c. 7tatement ( is false but statement $ is true
d. 7tatements ( and $ are true
3. Fringe benefit not covered by the fringe benefit tax.
a. =e minimis benefit.
b. )ousing privileges granted to rank and file employees.
c. Fringe benefits granted as a result of the nature of the business, trade, or profession of
the employer.
d. 'll of these.
&. The following earnings are sub"ect to fringe benefit tax, e0(ept
a. 7alary of a rank and file employee
b. )ousing necessary for trade and for the convenience of the employer
c. Food allowance for the convenience of the employer and necessary in the conduct of the
business
d. 'll of the above
%. The following are e0e!pt fringe 'enefits7 e0(ept for one
a. Fringe benefits given to rank and file employee.
b. Fringe benefit given for the convenience of the employee.
c. Dhen the fringe benefit is re<uired by the nature of or necessary to the trade, business
or profession of the employer.
d. !ice benefit amounting to @(,.44 a month.
(4. Dhich of the following fringe benefits is not sub"ect to the fringe benefits taxH
a. :ontributions of the employer for the benefit of the employee to retirement, insurance
and hospitali2ation benefit plans
b. )ousing
c. *xpense account
d. ,ehicle of any kind
((. $tatement 1B )ousehold of the employee borne by the employer such as salaries of household
help, personal driver, or other similar personal expenses are taxable fringe benefits.
$tatement %B ' fringe benefit which is #6T sub"ect to the fringe benefit tax is taxable income of
the employee.
a. 7tatements ( I $ are false
b. 7tatement ( is true but statement $ is false
c. 7tatement ( is false but statement $ is true
d. 7tatements ( and $ are true
($. Fringe benefit tax is computed based on the
a. 1onetary value of the fringe benefit
b. Book value of the fringe benefit
c. >rossed up monetary value of the fringe benefit
d. Fair value of the fringe benefit
(+. Dhich of the following statements regarding grossedup monetary value isGare correctH
/. The grossedup monetary value of the fringe benefit is simply a figure meant to
represent the entire income earned by the employee.
//. The grossedup monetary value includes the net amount of money received, the
net monetary value of any property received, "n) the amount of fringe benefit tax
received by the employee from the employer.
///. The grossedup monetary value of the fringe benefit is determined by dividing the
monetary value of the fringe benefit by 0&A starting 9anuary (, $444.
*.=. T'B'> ? @
21-19
a. / only c. /, // and ///
b. / and // only d. #one of the above
(-. Dhich statement is &rongH The amount on which the fringe benefit tax rate is applied isB
a. The monetary value of the fringe benefit
b. The grossedup monetary value of fringe benefit
c. The amount deductible by the employer from hisGits gross income
d. !eflected in the books of accounts in the two accounts of Jfringe benefit expenseK and
Jfringe benefit tax expenseK
(.. /f both the fringe benefit expense and the fringe benefit tax expense are allowed as deductions
from gross income of a corporation, the entry in the books of accounts is
a. Fringe benefit expense xxx
Fringe benefit tax expense xxx
:ash xxx
b. Fringe benefit tax expense xxx
:ash xxx
c. Fringe benefit expense xxx
Fringe benefit tax expense xxx
/ncome constructively
received
xxx
:ash xxx
d. 'ny of the above
(0. The monetary value of fringe benefit if given in money is
a. Fair market value (B/!) or 2onal value whichever is higher.
b. 'mount granted
c. =epreciated value
d. 'c<uisition cost plus other incidental costs
(3. The following statements are true, e0(ept
a. Fringe benefit tax shall be treated as a final income tax on the employee withheld
and paid by the employer on a <uarterly basis
b. The gross up monetary value of the fringe benefit is the actual amount received by
the employee
c. The grossedup monetary value of the fringe benefit shall be determined by dividing
the monetary value of the fringe benefit by the gross monetary value factor
d. The person liable for fringe benefit tax is the employer, whether he is an individual,
professional partnership or a corporation regardless of whether the corporation is taxable
or not or the government and its instrumentalities.
(&. $tatement 1: if the employer did not withhold the fringe benefit tax and subse<uently discovered
and assessed by the B/!, the related fringe benefit tax is not allowed as a deduction from the
employerEs gross income.
$tatement %: Fringe benefit tax includes additional help granted by the employer to the
employees in addition to the basic salary.
a. 7tatements ( I $ are false
b. 7tatement ( is true but statement $ is false
c. 7tatement ( is false but statement $ is true
d. 7tatements ( and $ are true
(%. $tatement 1B The exemption of any fringe benefit from the fringe benefit tax shall not be
interpreted to mean exemption from any other income tax imposed under the Tax :ode except if
the same is likewise expressly exempt from any other income tax imposed under the Tax :ode
or under any other existing law.
$tatement %B /f the fringe benefit exempted from the fringe benefit tax, the same may, however
still form part of the employeeEs gross compensation income which is sub"ect to income tax,
hence, likewise sub"ect to withholding tax on compensation income payment.
a. 7tatements ( I $ are false
b. 7tatement ( is true but statement $ is false
c. 7tatement ( is false but statement $ is true
d. 7tatements ( and $ are true
*.=. T'B'> ? 5
21-19
$4. :ost of life or health insurance and other nonlife insurance premiums borne by the employer for
his employee shall be treated as taxable fringe benefit, *C:*@T
a. :ontributions of the employer for the benefit of the employee pursuant to provision of
existing laws such as under 777 and >7/7.
b. :ost of premiums borne by the employer for the group insurance of his employees.
c. Both JaK and JbK.
d. #one of the above
$(. Dhich of the following statements regarding fringe benefit isGare trueH
/. *xpenses incurred by the employee but which are paid for or reimbursed by the
employer are taxable fringe benefits, *C:*@T when the expenditures are duly
receipted for and in the name of the employer and the expenditures do not
partake the nature of a personal expense attributable to the employee.
//. Benefits given to the rank and file, whether granted under a collective bargaining
agreement or not are 78B9*:T to fringe benefit tax.
///. The exemption of any fringe benefit from the fringe benefit tax shall #6T be
interpreted to mean exemption from any other income tax unless the same is
likewise exempt by law.
a. / only c. /, and // only
b. / and /// only d. 'll of the above
$$. Fringe benefits #6T 78B9*:T to fringe benefit tax include which of the followingH
/. Fringe benefits authori2ed and exempted from income tax under the :ode or
under any special law.
//. :ontributions of the employer for the benefit of the employee to retirement,
insurance, and hospitali2ation benefit plans.
///. Benefits given to the rank and file, whether granted under a collective
bargaining agreement or not.
/,. =e minimis benefits.
a. / and // only c. 'll of the above
b. // and /// only d. #one of the above
$+. Dhich of the following shall be sub"ect to fringe benefits taxH
a. )ousing privilege of 'rmed Forces of the @hilippines.
b. )ousing units situated inside or ad"acent to business or factory (located within +4 meters
from the perimeter of the business.
c. Temporary housing for an employee who stays in the housing unit for + months or less.
d. )ousing privilege of an alien employee of an offshore banking unit in the @hilippines.
$-. $tatement 1B Fringe benefits sub"ect to fringe benefit tax is #6T among the items of gross
income for purposes of computing the income tax liability under 7ection $-' of an individual
employee.
$tatement %B ' fringe benefit tax of (.A is imposed on the grossedup monetary value of the
fringe benefit of an alien individual employed by regional or area head<uarters of multinational
company or by regional operating head<uarters of a multinational company.
a. 7tatements ( I $ are false
b. 7tatement ( is true but statement $ is false
c. 7tatement ( is false but statement $ is true
d. 7tatements ( and $ are true
FRINGE BENEFITS TAX 9 .o!put"tions
$.. )ow much is the allowable deduction from business income of a domestic corporation which
granted and paid @(4$,444 fringe benefits to its key officers in $4($H
a. @(.4,444 c. @%%,444
b. @(44,444 d. 0.,444
$0. /n $4(4, 'B: :orporation gave the following fringe benefits to its employees
To managerial employees @(,+04,444
To rank and file employees .,444,444
The allowable deduction from the gross income of the corporation for the fringe benefits
given to employees is
a. @$,444,444 c. @0,+$4,444
b. @$,(-&,444 d. @3,444,444
*.=. T'B'> ? A
21-19
$3. /n $4(4, 'B: :orporation provided a +day vacation in Tagaytay to all of its employees of which
&4A are rank and file. Total expenses incurred by the company for the said vacation amounted
to @(1. The fringe benefit tax expense is
a. @-34,.&& c. @%-,(&&
b. @+30,-34 d. @$%-,((&
$&. 8sing the above data, the total deductible expense is
a. @(,$%-,((& c. @(,444,444
b. @$%-,((& d. @(,4%-,((&
2se the following data for the ne#t two 3uestions:
From a managerial employee for taxable year $4(4B
7alaries and wages net p" @+.-,444
777 and medicare contributions 0,444
tax withheld $0,444
Fixed monthly allowance, not sub"ect to li<uidation -&,444
!egular gasoline allowance, su'?e(t to li<uidation +4,444
(+
th
month pay $4,444
:hristmas bonus (4,444
$%. Taxable compensation income su'?e(t to gr")u"te) r"tes is
a. @-&3,444 c. @+&4,444
b. @+&0,444 d. @+.-,444
+4. The fringe benefit tax due from the above benefit is
a. @+0,340 c. @$-,%-(
b. @++,-($ d. @$$,.&&
+(. The following information are presented to you in connection with the determination of the fringe
benefits tax of the =aniel, ,ice@resident of )ananiah :orporationB
aid by the company with official receipts in the name of the 4ananiah )orporation:
5aptop computer for =anielEs office use, @&4,444.
'irconditioning unit for =anielEs office use, @+4,444.
>roceries for =anielEs family consumption, @(4,444.
@lumbing materials for use in the repair of =anielEs residential house, @.,444.
aid by 5aniel with official receipts in the name of 4ananiah )orporation:
@urchase of clothes and shoes for =anielEs daughter, @(.,444.
7amples of merchandise sold in the competitorEs store for marketing study, @($,444.
)ow much is the fringe benefits tax dueH
a. @(-,((& c. @.&,&$-
b. @-&,0-4 d. @3(,.$%
Spe(i"# Ru#es on t%e Deter!in"tion of t%e Monet"r ;"#ue for 2ousing "n) ;e%i(#e Benefits
+$. For purposes of the fringe benefit tax, the monetary value of a housing benefit granted by
employer to employee where the housing unit provided for use by the employee as his usual
place of residence is owned by the employer.
a. The amount of depreciation for the housing unit.
b. .4A of the annual value which is .A of the fair market value or 2onal value, whichever is
higher.
c. .4A of the amount of depreciation.
d. #et book value
2se the following data for 3uestions !1 and !%:
The following fringe benefits were given by an employer to its employees for the <uarter ending
1arch +(, $4($;
)ousing benefits to supervisors and managers
(representing tot"# rents)
@+-4,444
!eimbursed expenses of rank and file employees $44,444
=e minimis benefits (not exceeding the maximum) (44,444
!!* 4ow much was the fringe benefit ta# payable for the 3uarter*
a. @+4(,(30 c. @(04,444
*.=. T'B'> ? B
21-19
b. @$.-,((& d. @&4,444
+-. )ow much would be the total deductions from gross income which may be claimed by the
employerH
a. @&44,444 c. @344,444
b. @3$4,444 d. @0-4,444
2se the following data for the ne#t five 3uestions:
/ncluded in the compensation package of an executive was the free use of t%e (o!p"nCs
resi)enti"# (on)o!iniu! unit in 1akati :ity, @hilippines. =ata on the condominium unit
followsB
Fair market value in the !eal @roperty =eclaration @(,444,444
Lonal value $,444,444
Fair market value $,.44,444
+.. )ow much is the monthly gross monetary value of the fringe benefit and the fringe benefit tax,
respectivelyH
a. @-,(003.03; @(,%04.3& c. @$,444,444; @34.,&+$.+.
b. @(,.44,444; @+$0,-44 d. @0,($3.-.; @%-.,(30.-3
+0. 'ssume the residential condominium unit was purchased by the company in installment for the
executiveEs free use. 'c<uisition cost exclusive of interest was @+,444,444. 't what amount
should the company report as the monthly gross monetary value of the fringe benefit and the
fringe benefit tax, respectivelyH
a. @-,(003.03; @(,%04.3& c. @$,444,444; @34.,&+$.+.
b. @(,.44,444; @+$0,-44 d. @0,$.4; @$,%-(.(&
+3. 'ssume the residential condominium unit was purchased by the company in installment,
ownership of which will be transferred to the executive. 'c<uisition cost exclusive of interest was
@+,444,444 with a fair market value determined at @.,444,444. 't what amount should the
company report as the monthly gross monetary value of the fringe benefit and the fringe benefit
tax, respectivelyH
a. @-(0,03.003; @(%0,43&4.-$ c. @$,444,444; @34.,&+$.+.
b. @(,.44,444; @+$0,-44 d. @0,$.4; @$,%-(.(&
+&. 'ssume the residential condominium unit was purchased by the company in installment,
ownership of which will be transferred to the executive. 'c<uisition cost exclusive of interest was
@+,444,444 with a fair market value determined at @.,444,444. The employee is re<uired to pay
@$,444,444 to the employer before the transfer of ownership is made. 't what amount should
the company report as the monthly gross monetary value of the fringe benefit and the fringe
benefit tax, respectivelyH
a. @-(0,03.003; @(%0,43&4.-$ c. @$.4,444; @((3,0-3.4.
b. @(,.44,444; @+$0,-44 d. @0,$.4; @$,%-(.(&
+%. 'ssume the residential condominium unit is located in :ebu and that the executive is allowed to
use the same for a period of three months while he is compeleting an evaluation of the overall
performance of the companyEs :ebu branch. 't what amount should the company report as the
monthly gross monetary value of the fringe benefit and the fringe benefit tax, respectivelyH
a. @-,(003.03; @(,%04.3& c. @$,444,444; @34.,&+$.+.
b. @(,.44,444; @+$0,-44 d. @4; @4
Use t%e follo+ing &ata for t%e next fi0e 3uestions:
/ncluded in the compensation package of the :hief 'ccountant is a car plan worth @(,444,444.
The ownership will be transferred in the name of the employee.
-4. 'ssume the employer purchases the car in the name of the employee. 't what amount should
the employer report as the gross monetary value of the fringe benefit and the fringe benefit tax,
respectivelyH
a. @(,-34,.&&; @-34,.&& c. @3+.,$%-; @$+.,$%-
b. @(,444,444; @+$4,444 d. @.44,444; @(04,444
*.=. T'B'> ? 14
21-19
-(. 'ssume the employer provides @&44,444 to the employee to purchase any vehicle of his
interest, 6wnership of the car is placed in the name of the employee. The employee purchased
a brand new car worth @(,$44,444. 't what amount should the employer report as the gross
monetary value of the fringe benefit and the fringe benefit tax, respectivelyH
a. @(,30-,340; @.0-,340 c. @(,(30,-3(; @+30,-3(
b. @(,-34,.&&; @-34,.&& d. @&44,444; @$.0,444
-$. 'ssume the employer purchases the car in installment in the name of the employee. 't what
amount should the employer report as the gross monetary value of the fringe benefit and the
fringe benefit tax, respectivelyH
a. @(,-34,.&&; @-34,.&& a. @$%-,((&; @%-,((&
b. @(,444,444; @+$4,444 b. @$44,444; @0-,444
DE MINIMIS BENEFITS
-+. $tatement (B =e minimis benefits are Facilities or privileges furnished or offered by an employer
to his employees that are of relatively small value and are offered or furnished by the employer
merely as a means of promoting the health, goodwill, contentment, or efficiency of his
employees.
$tatement $B =e 1inimis benefit given to rank and file employees or to managerial or
supervisory employees are not sub"ect to final withholding tax for fringe benefit and creditable
withholding tax.
a. 7tatements ( I $ are false
b. 7tatement ( is true but statement $ is false
c. 7tatement ( is false but statement $ is true
d. 7tatements ( and $ are true
--. $tatement 1B 8niforms and clothing allowance not exceeding @.,444 per annum is an exempt
de minimis benefit.
$tatement %B 'ctual medical benefits not exceeding @(4,444 per annum is an exempt de
minimis benefit.
a. 7tatements ( I $ are false
b. 7tatement ( is true but statement $ is false
c. 7tatement ( is false but statement $ is true
d. 7tatements ( and $ are true
-.. !easonable business expenses which are paid for by the employer for the foreign travel of his
employee to attend business meetings or conventions are not taxable as fringe benefits. Dhich
is #6T trueH
/. /nland travel expenses (food, beverages, and local transportation) except
lodging cost in a hotel or similar establishment amounting to an average of
87F+44 or less per day, shall not be sub"ect to a fringe benefit tax.
//. The cost of economy and business class airplane ticket shall not be sub"ect to
a fringe benefit tax. )owever, +4A of the cost of first class airline ticket shall
be sub"ect to a fringe benefit tax.
///. The expenses should be supported by documents proving the actual
occurrences of the meetings or conventions, otherwise, they shall be treated
taxable fringe benefit.
a. / only c. /, // and ///
b. / and // only d. #one of the above
-0. 1
st
$tatement !ice subsidy of one thousand five hundred pesos or one sack of .4 kg. rice per
month amounting to not more than one thousand five hundred pesos is an exempt de minimis
benefit.
%
nd
$tatement *mployee achievement awards, e.g., for length of service, or safety
achievement, which must be in the form of a tangible personal property other than cash or gift
certificate, with an annual monetary value not exceeding ten thousand pesos received by an
employee under an established written plan which does not discriminate in favor of highly paid
employees is an exempt de minimis benefit.
a. 7tatements ( I $ are false
b. 7tatement ( is true but statement $ is false
c. 7tatement ( is false but statement $ is true
d. 7tatements ( and $ are true
-3. Dhich of the following benefits received by a rankandfile employee will be taxableH
a. @$4,444 received e<uivalent to (4 days unused vacation leave.
*.=. T'B'> ? 11
21-19
b. 1onthly rice subsidy of @(,-.4.
c. @(&,444 received for uniform and clothing allowance.
d. 'nnual medical benefits for @(4,444
-&. ' domestic :orporation gives all its employees (rank and file, supervisors and managers) one
sack of rice every month valued at @(,$44 per sack. =uring an audit investigation made by the
Bureau of /nternal !evenue (B/!), the B/! assessed the company for failure to withhold the
corresponding withholding tax on the amount e<uivalent to the one sack of rice received by the
employees, contending that the sack of rice is considered as additional compensation for the
rank and file employees and additional fringe benefit for the supervisors and managers.
Therefore, the value of the one sack of rice every month should be considered as part of the
compensation of the rank and file sub"ect to tax. For the supervisors and managers, the
employer should be the one assessed pursuant to 7ection ++ (a) of the #/!:. /s there a legal
basis for the assessment made by the B/!H
a. Mes, benefits received by the rank and file are sub"ect to compensation tax.
b. Mes, benefits received by supervisory employees and managerial employees are
sub"ect to fringe benefit tax.
c. #o, the benefit is a =eminimis benefit, exempt from income tax.
d. #o, the benefit is for the convenience of the employer, thus, exempt.
-%. $tatement 1B ' minimum wage earner is a worker in the private sector paid the statutory
minimum wage.
$tatement %B ' minimum wage earner is an employee in the public sector with compensation
income of not more than the statutory minimum wage in nonagricultural sector where he or she
is assigned.
a. 6nly statement ( is correct
b. 6nly statement $ is correct
c. Both statements are correct
d. Both statements are incorrect
.4. 59 is a resident citi2en employed by :hris 7ports, /ncorporated. )e received the following from
his employer during the taxable yearB
Basic compensation income @044,444
(+
th
month pay .4,444
(
st
semiannual bonus ((-
th
month pay) .4,444
$
nd
semiannual bonus ((.
th
month pay) .4,444
:hristmas bonus $.,444
8niform allowance (.,444
'ctual medical allowance (4,444
!ice subsidy $-,444
=etermine 59Es taxable income
a. @3.0,444 c. @344,444
b. @340,444 d. @0.4,444
NNN *ndNNN
*.=. T'B'> ? 12