BM1804

NAME: DATE: SCORE:

Fringe Benefits Taxes (4 items x 10 points)

Compute for the fringe benefits tax due in the following scenarios.

1. In 2018, Delta Corporation bought a condominium unit on installment for the use of its executive. The acquisition cost
inclusive of 12% interest is P6,720,000. The fair market value of the property per tax declaration is P6,800,000 while the
zonal value is P6,500,000.

a. How much is the fringe benefits tax?

Acquisition Cost P 6,720,000.00

Annual Value of benefit (6,720,000 x 5%) 336,000.00
Annual monetary benefit (336,000 x 50%) 168,000.00

GMV value of benefit (168,000 ÷ 65%) 258,461.54

Fringe Benefit Tax (258,461.54 x 35%) P 90,461.54

b. Assuming that the ownership over the property will be transferred to the executive, how much is the fringe
benefits tax?

Acquisition Cost P 6,720,000.00

Zonal value 6,500,000.00
Higher of two (2) values 6,720,000.00
Monetary Value of the benefit (6,720,000 x 100%) 6,720,000.00

GMV value of benefit (6,720,000÷ 65%) 10,338,461.54

Fringe Benefit Tax (10,338,461.54 x 35%) P 3,618,461.54

2. Delata Corporation bought a condominium unit for P6,000,0000. The fair market value of the property per tax
declaration is P6,800,000 while the zonal value is P6,500,000. It was transferred in the name of Pedro, one of its
executives, for a lower consideration amounting to P5,800,000. How much is the fringe benefits tax?

Real Property Tax Declaration P 6,720,000.00

Fair Market Value 6,800,000.00
Higher of two (2) values 6,800,000
Cost to Pedro 5,800,000
Monetary Value of the benefit 1,000,000

GMV value of benefit (1,000,000÷ 65%) 1,538,461.54

Fringe Benefit Tax (1,538,461.54 x 35%) P 538,461.54

3. Omega Corporation purchased a motor vehicle worth P1,400,000 for the use of its executive. It was registered under
the executive’s name despite the agreement that it should be used partly for the company’s benefit. How much is the
fringe benefits tax?

Acquisition Cost of motor vehicle P 1,400,000.00

GMV value of benefit (1,400,000 ÷ 65%) 2,153,846.15
Fringe Benefit Tax (258,461.54 x 35%) P 753,846.15

4. First Metro Pacific was able to persuade Francis to join the company as its Assistant Vice President for Finance which
included a car plan worth P3,000,000 in its compensation package. The company purchased the vehicle and registered
the same in favor of Francis. Assuming further that Francis is a non-resident alien not engaged in trade or business, how
much is the fringe benefits tax?

Acquisition Cost of car P 3,000,000

GMV value of benefit (3,000,000 ÷ 75%) 4,000,000
Fringe Benefit Tax (4,000,000 x 25%) P 1,000,000
Rubric for Grading:
CRITERIA POINTS
Complete solution with correct answer 10
Last two (2) major steps of the solution are incorrect 8
Half of the solution is correct 6
First two (2) major steps of the solution are correct 4
First major step of the solution is correct 2

06 Task Performance 1 *Property of STI

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