FRINGE BENEFITS TAX

1. The following concepts denote exemption from the fringe benefits tax, except
a. convenience of the employer
b. necessity to the business or trade
c. welfare and benefits of the employee
d. de minimis benefits

2. With regard to the amount on which the fringe benefit tax rate is applied, which statement is wrong? The tax
benefit rate is applied on
a. The monetary value of the fringe benefit
b. The gross-up monetary value of the fringe benefit
c. The amount deductible by the employer from gross income
d. Both accounts of the fringe benefit and the fringe benefit tax

3. The following fringe benefits are not subject to fringe benefit tax, except
a. if required by the nature of or necessary to the trade, business or profession of the employer
b. contributions of the employer for the benefit of the employee to retirement, insurance and hospitalization
benefits plans
c. benefits given to the rank and file employees.
d. if given for the convenience or advantage of the employee

4. Basic rules on fringe benefits tax, except

a. Fringe benefits given to the rank and file employees are not subject to fringe benefits tax
b. Fringe benefits given to a supervisory or managerial employee are subject to fringe benefits tax
c. De minimis benefits whether given to rank and file employee or to supervisory or managerial employee are
not subject to fringe benefit tax
d. The fringe benefit tax is a tax imposed on the managerial or supervisory employee

5. As a rule, fringe benefit furnished or granted in cash or in kind by an employer to an individual employee maybe
subject to the fringe benefit tax, if given to
A. Rank and file employees B. Managerial employees C. Those holding supervisory positions

a. Only A and B b. Only A and C c. Only B and C d. A, B and C

6. The fringe benefit tax is

A. Imposed on the employer B. Withheld at source C. Deductible expense by the employee

a. Only A and B b. Only A and C c. Only B and C d. A, B and C

7. Which of the following is subject to fringe benefit tax?

a. compensation income of the rank and file employees
b. fringe benefit of the rank and file employees
c. compensation income of the managerial employees
d. fringe benefit of the managerial employees

8. Which of the following statements is correct?

a. Fringe benefits given to employees is subject to fringe benefits tax
b. Fringe benefits given to employees is exempt from fringe benefits tax
c. If the fringe benefits is taxable, the tax will be paid by the employer
d. Fringe benefits maybe given to managerial, supervisory and rank and file employees
9. Daily meal allowance for overtime work is a de minimis if not exceeding what percent of the basic minimum
wage?
a. 10% b. 15% c. 20% d. 25%

10. 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.
a. fringe benefit b. fringe benefit tax c. de minimis d. grossed-up monetary

11. the following fringe benefits are not subject to fringe benefits tax, except:
a. Fringe benefits given to the rank and file employees, whether granted under a collective bargaining agreement
or not
b. Contributions of the employer for the benefit of the employees to retirement, insurance and hospitalization
benefits plan
c. De minimis benefits, as defined in the rules and regulations to be promulgated by the Secretary of Finance,
upon recommendation of the Commissioner.
d. Fringe benefits furnished or granted by the employer to its managerial and supervisory employees.

12. Which statement is wrong? The fringe benefits tax is

a. imposed on the employer
b. imposed on the rank and file employee if the amount of the benefit exceeds the ceiling allowed by the tax
code
c. withheld at source
d. deductible by the employer

13. A Corporation gave the following cash benefits to a rank and file employee in 2011:
Uniform allowance P 5,000
Rice subsidy 21,000
Monetized unused leave credits (12 days) 9,000
Safety achievement award 10,000
Medical allowance to dependents of the employee 2,000
Medical benefits 12,000
13th month pay 16,000
Christmas bonus 16,000

The fringe benefits that shall be considered as part taxable income is

a. P 10,000 b. P 20,000 c. P 18,000 d. P 8,000

14. In 2012, A Corporation allows its Sales Manager to incur expenses subject to reimbursement, as follows:
Electricity (Meralco) – 70% in the name of A Corporation P 20,000
Water (Maynilad) -70% in the name of A Corporation 2,000
Grocery (SM) 10,000
Gasoline of Company car 12,000
Representation and Transportation 4,000
The amount subject to fringe benefits tax is
a. P48,000 b. P25,400 c. P15,400 d. P16,600

15. The grossed-up monetary value of fringe benefit subject to fringe benefit tax received by a non-resident alien
individual not engaged in trade or business in the Philippines is computed by dividing the monetary value of the
fringe benefit by
a. 75% b. 25% c. 85% d. 15%
 ***16-17
As a means of promoting the health , goodwill, and efficiency of his employees, employer A gave rank and file
employee B the following fringe benefits in 2012:

a. Monetized unused leave credits of 15 days P 9,000

b. Rice Subsidy 24,000
c. Uniform and clothing allowance 8,000
d. Achievement award for length of service in the form of tangible 15,000
property
e. Gifts given during Christmas and major anniversary celebrations 10,000
f. 13th month pay 18,000

16. The amount of taxable fringe benefits is

a. P30,000 b. P10,000 c. P23,000 d. P11,000

17. The employer’s deductions for the benefits given

a. P23,000 b. P18,000 c. P66,000 d. P84,000

18. The following data belong to A Corp. for the year 2010
a. Educational assistance to supervisors and their children P 100,000
b. Employer’s contribution for the benefit of the employees to retirement, insurance 80,000
and hospitalization benefit plans
c. Year’s rental for an apartment paid by the Co. for the use of its comptroller 120,000
The fringe benefits tax due is
a. P75,294 b. P103,529 c. P141,176 d. P112,941
19. A Corp., a regional operating headquarters of a multinational Corp. established in the Phils. Provided its employees
cash and non-cash fringe benefits in 2010 as follow:
Total amount of fringe benefits P1,000,000
60% of said amount was given to rank and file employees
40% of said amount was given to corporate officers as follow:
a. to resident citizens 45%
b. to non-resident aliens not engaged in business in the Phils. 35%
c. to special aliens and Filipino employees 20%
The fringe benefits tax due is
a. P145,489 b. P188,235 c. P84,706 d. P60,704

20. A Co., paid a monthly salary of P100,000 and the monthly rental of P68,000 for a condominium unit for the
General Manager.
Determine the monthly fringe benefit tax payable (16,000)

21. B Co., owns a condominium unit which is being used by the President of the corp.. It has a fair market value per
Real Property Tax Declaration of P2,100,000 and a zonal value of P3,000,000.
Determine the monthly fringe benefit tax due (8,824)

22. Mr. A is a mining engineer employed by B. Co., a mining firm. The Co.’s mine is in Minndanao. Mr. A was
provided by the Co. with living quarters at the mine site. The fair rental value of the living quarters is P15,000 a
month.
Determine the monthly fringe benefit tax due (0)
23. In addition to other fringe benefits, Mr. B, a Chief Accountant, availed of the car plan of his employer, C Co.,
Under the plan, Mr. B shouldered only fifty percent (50%) of the cost of the car. Mr. B paid P340,000 for the car.
The car was registered in the name of Mr. B. the Co. paid another P340,000.
Determine:
a. The fringe benefit tax due (160,000)
b. The deductible expense of the employer. (500,000)

24. In 2010, A company purchased a second hand car for its Chief Accountant as a fringe benefits. The cash purchases
price of the car is P120,000, but the company paid P30,000 as down payment plus four equal annual instalment of
P30,000 (P120,000 plus P30,000 interest). The ownership was transferred to the chief accountant.
Determine the monthly fringe benefit tax due (2,824)

25. In 2010, A, the sales manager, purchased a brand new car amounting to P500,000 of which P200,000 was
contributed by the company as his fringe benefit.
Determine the monthly fringe benefit tax due (94,118)

26. In 2010, ABC Corp. hired Miss A as sales manager for cosmetics. She was given the following compensation and
fringe benefit:
Salary P 200,000/month
Three maids 4,000 per maid/month
Personal driver 8,000/ month
Home owner’s Association dues 1,200/year
Determine the monthly fringe benefit tax due (28,376)

27. In 2012, A, the owner of Victory Supermarket lends P100,000 to B, the supermarket manager. It is stipulated in
their agreement that the amount should be paid in one year with an annual interest of 3%.
Determine the monthly fringe benefit tax due (4235/4=1059)

28. In 2012, Mr. A the Vice President for finance of X Corp. incurred the following expenses by attending a three-day
foreign business convention:

Plane tickets (USA travel)

First class $ 1,000
Economy 500
Hotel accommodation (USA) 2,700
Inland travel 600
Assume $1.00 = P50
Determine the monthly fringe benefit tax due assuming that the business convention was:
a. With documentary evidence (49,412) b. Without documentary evidence (112,941)

29. During the taxable year 2010, A Corp. assigned its own residential building as a residential building as a residential
house of its Marketing Manager. The FMV of the said property as determined by the CIR and the fair market value
of its current Real Property Tax declaration amounts to P9,000,000 & P10,000,000, respectively.
Determine the monthly fringe benefit tax due for the month of January. (9,804)

30. In 2010 ABC Corporation paid for the annual rental of a residential house used by its general manager amounting
to P136,000. The entry to record the benefits is

a. Fringe Benefit Expense P 136,000

Fringe Benefit Tax Expense 64,000
Cash P 200,000
b. Fringe Benefit Expense P 136,000
Fringe Benefit Tax Expense 32,000
 Cash P 200,000
c. Fringe Benefit Expense P 68,000
Fringe Benefit Tax Expense 32,000
Cash P 168,000
d. Fringe Benefit Expense P 68,000
Fringe Benefit Tax Expense 64,000
Cash P 132,000

31. Identify whether or not the following are subject to fringe benefits tax:
a. Fringe benefit required by the nature of or necessary to trade, business of the employer
b. Fringe benefit for the convenience or advantage of the employer
c. Fringe benefit given to rank and file employees
d. Housing privilege of the AFP
e. Housing units situated inside or adjacent to business or factory (located within 30 meters from the perimeter of
the business)
f. Temporary housing for an employee who stays in the housing unit for 3 months or less
g. Representation and entertainment allowances which are fixed in amount and regularly received by employee
h. Use by employee of aircraft (including helicopters) owned and maintained by the employer
i. Cost of economy and business class airplane ticket for foreign travel
j. De minimis benefits
k. Educational assistance granted to employees’ dependents through competitive scheme under scholarship
program of the company
l. Cost of premiums borne by the employer for the group insurance of his employees
m. Contributions of employer for the benefit of the employee under SSS and GSIS laws
n. Contributions of the employer for the benefit of the employees to retirement, insurance and hospitalization
benefit plam.